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JReport  on 

ECONOMIC  CONDITIONS 

OF  THE  SOUTH 

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Prepared  for 
THE  PRESIDENT 

by 
THE  NATIONAL  EMERGENCY  COUNCIL 


Digitized  by  the  Internet  Archive 

in  2009  with  funding  from 

University  of  North  Carolina  at  Chapel  Hil 


http://www.archive.org/details/reportoneconomicOOnati 


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l^eport  on 

ECONOMIC  CONDITIONS 

OF  THE  SOUTH 

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Prepared  for 
THE  PRESIDENT 

THE  NATIONAL  EMERGENCY  COUNCIL 


REQUEST  FOR  REPORT 

The  White  House, 
Washington,  June  22, 1938. 

My  Deak  Me.  Mellett:  Discussions  in  Congress  and 
elsewhere  in  connection  with  legislation  affecting  the  eco- 
nomic welfare  of  the  Nation  have  served  to  point  out  the 
differences  in  the  problems  and  needs  of  the  different  sec- 
tions of  the  country  and  have  indicated  the  advisability  of 
a  clear  and  concise  statement  of  these  needs  and  problems 
in  a  form  readily  available,  not  only  to  the  Members  of 
Congress,  but  to  the  public  generally. 

Attention  has  recently  been  focused  particularly  upon 
the  South  in  connection  with  the  wages  and  hours  bill,  and 
I  should  like  the  National  Emergency  Council  to  under- 
take the  preparation  of  such  a  statement  of  the  problems 
and  needs  of  the  South.  In  preparing  this  statement  I 
suggest  that  you  call  freely  upon  the  various  governmental 
departments  and  administrative  agencies  for  information 
as  to  matters  with  which  they  are  especially  acquainted, 
and  also  that  you  request  the  assistance  of  southerners 
well  known  for  their  interest  in  the  South  and  familiarity 
with  its  problems. 

The  outcome  of  this  undertaking  may  indicate  the  ad- 
visability of  similar  studies  with  reference  to  other  sections 
of  the  country. 

Very  sincerely, 

(Signed)     FRANKLIN  D.  ROOSEVELT. 

Hon.  Lowell  Mellett, 
Executive  Director, 

National  Emergency  Council. 


REPORT  TO  THE  PRESIDENT 

ON 

THE  ECONOMIC  CONDITIONS  OF 
THE  SOUTH 


THE  PRESIDENT'S  LETTER 

To  the  Members  of  the  Conference  on  Economic  Condi- 
tions in  the  South: 

No  purpose  is  closer  to  my  heart  at  this  moment  than 
that  which  caused  me  to  call  you  to  Washington.  That 
purpose  is  to  obtain  a  statement — or  perhaps,  I  should  say 
a  restatement  as  of  today — of  the  economic  conditions  of 
the  South,  a  picture  of  the  South  in  relation  to  the  rest 
of  the  country,  in  order  that  we  may  do  something  about 
it ;  in  order  that  we  may  not  only  carry  forward  the  work 
that  has  been  begun  toward  the  rehabilitation  of  the 
South,  but  that  the  program  of  such  work  may  be  expanded 
in  the  directions  that  this  new  presentation  shall  indicate. 

My  intimate  interest  in  all  that  concerns  the  South  is, 
I  believe,  known  to  all  of  you ;  but  this  interest  is  far  more 
than  a  sentimental  attachment  born  of  a  considerable 
residence  in  your  section  and  of  close  personal  friendship 
for  so  many  of  your  people.  It  proceeds  even  more  from 
my  feeling  of  responsibility  toward  the  whole  Nation.  It 
is  my  conviction  that  the  South  presents  right  now  the 
Nation's  No.  1  economic  problem — the  Nation's  problem, 
not  merely  the  South 's.  For  we  have  an  economic  unbal- 
ance in  the  Nation  as  a  whole,  due  to  this  very  condition 
of  the  South. 

It  is  an  unbalance  that  can  and  must  be  righted,  for  the 
sake  of  the  South  and  of  the  Nation. 

Without  going  into  the  long  history  of  how  this  situation 

(1) 

84767°— 38 1 

600894 


came  to  be — the  long  and  ironic  history  of  the  despoiling 
of  this  truly  American  section  of  the  country's  popula- 
tion— suffice  it  for  the  immediate  purpose  to  get  a  clear 
perspective  of  the  task  that  is  presented  to  us.  That  task 
embraces  the  wasted  or  neglected  resources  of  land  and 
water,  the  abuses  suffered  by  the  soil,  the  need  for  cheap 
fertilizer  and  cheap  power ;  the  problems  presented  by  the 
population  itself — a  population  still  holding  the  great 
heritages  of  King's  Mountain  and  Shiloh — the  problems 
presented  by  the  South 's  capital  resources  and  the  absentee 
ownership  of  those  resources,  and  problems  growing  out 
of  the  new  industrial  era  and,  again,  of  absentee  ownership 
of  the  new  industries.  There  is  the  problem  of  labor  and 
employment  in  the  South  and  the  related  problem  of  pro- 
tecting women  and  children  in  this  field.  There  is  the 
problem  of  farm  ownership,  of  which  farm  tenantry  is  a 
part,  and  of  farm  income.  There  are  questions  of  tax- 
ation, of  education,  of  housing,  and  of  health. 

More  and  more  definitely  in  recent  years  those  in  the 
South  who  have  sought  selflessly  to  evaluate  the  elements 
constituting  the  general  problem,  have  come  to  agree  on 
certain  basic  factors.  I  have  asked  Mr.  Mellett  to  present 
for  your  consideration  a  statement  of  these  factors  as  pre- 
pared by  various  departments  of  the  Government.  I  ask 
you  to  consider  this  statement  critically,  in  the  light  of 
your  own  general  or  specific  knowledge,  in  order  that  it 
may  be  made  representative  of  the  South 's  own  best 
thought  and  that  it  may  be  presented  to  Congress  and  the 
public  as  such. 

I  had  hoped  to  attend  your  meeting  and  listen  to  your 
discussions.  Unhappily,  other  pressing  work  makes  this 
impossible.  Please  accept  my  sincere  regret  that  I  camiot 
be  with  you,  and  be  assured  that  I  anticipate  with  deep 
interest  the  result  of  your  labors. 

FRANKLIN  D.  ROOSEVELT. 

The  White  House, 

Washington,  D.  C,  July  5,  1938. 

Southern  Pamphlets 
Bare  Book  n-r-h  011 


LETTER  OF  TRANSMITTAL 

July  25,  1938. 
to  the  president: 

In  response  to  your  request  of  June  22,  1938,  there  is 
transmitted  herewith  a  report  on  the  economic  problems  of 
the  South. 

The  report  presents  in  only  a  small  degree  the  manifold 
assets  and  advantages  possessed  by  the  South,  being  con- 
cerned primarily  not  with  what  the  South  has,  but  with 
what  the  South  needs. 

Preparation  of  the  report  was  aided  by  the  counsel  of  an 
advisory  committee  of  southern  citizens  known  for  their 
interest  in  the  region  and  their  familiarity  with  its  prob- 
lems. It  is  their  expressed  hope  and  belief  that  the  South 
will  benefit  from  a  thorough  examination  of  the  factors 
that  have  produced  the  present  economic  unbalance,  hurt- 
ful not  only  to  their  section  but  to  the  country  as  a  whole. 
This  committee  included : 

Dr.  B.  F.  Ashe,  president,  University  of  Miami,  Miami,  Fla. ;  Governor 
Carl  Bailey,  Little  Rock,  Ark.;  Barry  Bingham,  publisher,  Louisville 
Courier  Journal,  Louisville,  Ky. ;  W.  B.  Bizzell,  president,  State  University, 
Norman.  Okla. ;  Col.  P.  H.  Callahan,  president,  Louisville  Varnish  Co. ; 
Louisville,  Ky. ;  L.  O.  Crosby,  lumberman,  Picayune,  Miss. ;  Judge  Blanton 
Fortson,  judge,  superior  court,  Athens,  Ga. ;  Frank  Graham,  president, 
University  of  North  Carolina,  Chapel  Hill,  N.  C. ;  Attorney  James  Hammond, 
past  president,  Chamber  of  Commerce,  Columbia,  S.  C. ;  Col.  Leroy  Hodges, 
State  comptroller,  Richmond,  Va. ;  Miss  Liicy  Randolph  Mason,  C.  I.  O. 
representative,  Atlanta,  Ga. ;  H.  L.  Mitchell,  secretary-treasurer,  Southern 
Tenant  Farmers  Union,  Memphis,  Tenn. ;  Gen.  John  C.  Persons,  president. 
First  National  Bank,  Birmingham,  Ala. ;  Prof.  Chas.  W.  Pipkin,  Louisiana 
State  University,  Baton  Rouge,  La. ;  Paul  Poynter,  publisher,  St.  Petersburg 
Times,  St.  Petersburg,  Fla. ;  J.  H.  Reynolds,  president,  Hendricks  College, 
Conway,  Ark. ;  Robert  J.  Smith,  vice  president,  Braniff  Airways,  Dallas, 
Tex. ;  "s.  L.  Smith,  Peabody  College,  Nashville,  Tenn. ;  Alexander  Speer, 
former  president,  Virginia  Public  Service  Co.,  Alexandria,  Va. ;  Joseph 
G.  Tillman,  planter,  Statesboro,  Ga. ;  J.  Skottowe  Wannamaker,  president, 
American  Cotton  Association,  St.  Matthews,  S.  C. ;  Carl  White,  A.  F.  of  L., 
Port  Arthur,  Tex. 

The  various  departments  and  administrative  agencies 
were  called  on  for  information.  Factual  statements  were 
checked  by  the  Central  Statistical  Board,  and  many  men 
and  women  in  the  Government  contributed  their  know- 
ledge and  efforts.  The  actual  drafting  of  the  15  sections 
of  the  report  was  the  work  of  southerners,  intimately  ac- 
quainted with  their  own  region  and  vitaUy  concerned  in 
its  welfare. 

(3) 


As  used  in  this  report,  the  term  ''the  Southeast"  in- 
cludes the  States  of  Virginia,  Kentucky,  Tennessee,  North 
Carolina,  South  Carolina,  Georgia,  Florida,  Alabama, 
Mississippi,  Louisiana  and  Arkansas;  the  "Southwest" 
means  Oklahoma  and  Texas,  and  "The  South"  covers  all 
the  13  States. 

Effort  has  been  made  to  meet  your  desire  for  a  concise 
statement.  The  report  therefore  does  not  attempt  to  be 
exhaustive.  On  any  one  of  the  15  topics  discussed  much 
more  extensive  treatment  can  be  found  in  official  Govern- 
ment reports  or  in  studies  that  have  been  made  by  educa- 
tional institutions  and  individuals. 

One  thing  appears  to  be  made  clear  when  the  principal 
difficulties  faced  by  the  South  are  brought  into  perspective 
and  when  what  the  South  has  to  offer  the  Nation  is  laid 
alongside  what  the  South  needs  for  its  own  people ;  that 
is  that  the  economic  problems  of  the  South  are  not  beyond 
the  power  of  men  to  solve.  Another  thing  made  clear,  how- 
ever, is  that  there  is  no  simple  solution.  The  solution  must 
be  part  political,  with  the  Federal  Government  participat- 
ing along  with  State,  county,  city,  town,  and  township  gov- 
ernment. But  there  must  be  participation  also  by  indus- 
try, business  and  schools — and  by  citizens,  South  and 
North. 

The  example  given  by  the  men  named  above  in  lending 
their  time  and  their  patient  consideration  to  the  material 
condensed  into  this  brief  report  seems  to  assure  that  the 
citizens  of  the  South  do  not  hesitate  to  face  the  facts  of 
the  present  situation.  This,  in  turn,  would  seem  to  as- 
sure— to  use  your  own  language — that  something  will  be 
done  about  it. 

Lowell  Mellett, 
The  Executive  Director, 
National  Emergency  Council. 

SECTIONS  OF  REPORT 


1. 

Economic  resources. 

9. 

Labor. 

2. 

SoU. 

10. 

Women  and  children. 

3. 

Water. 

IL 

Ownership  and  use  of  land, 

4. 

Population. 

12. 

Credit. 

5. 

Private  and  public  income. 

13. 

Use  of  natural  resources. 

6. 

Education. 

14. 

Industry. 

7. 

Health. 

15. 

Purchasing  power. 

8. 

Housing. 

REPORT  TO  THE  PRESIDENT 

ON 

THE  ECONOMIC  CONDITIONS  OF 
THE  SOUTH 

Section  1 
ECONOMIC  RESOURCES 

In  the  South,  as  elsewhere,  the  two  most  important  eco- 
nomic endowments  are  its  people  and  its  physical  re- 
sources. The  1937  census  estimates  showed  that  the  13 
Southern  States  had  more  than  36  million  persons.  While 
this  population  is  descended  from  the  peoples  of  virtually 
every  country  of  the  world,  a  larger  percentage  derives 
from  early  American  stock  than  that  of  any  other  region 
in  the  United  States;  97.8  percent,  according  to  the  last 
census,  was  native  born ;  71  percent  white,  and  29  percent 
colored. 

The  birth  rate  in  the  South  exceeds  that  of  any  other 
region,  and  the  excess  of  births  over  deaths  makes  the 
South  the  most  fertile  source  for  replenishing  the  popula- 
tion of  the  United  States.  At  a  time  when  the  population 
of  the  country  as  a  whole  is  becoming  stationary,  there  is  a 
continuous  stream  of  people  leaving  the  South  to  work  in 
other  parts  of  the  Nation — greatly  in  excess  of  the  corre- 
sponding migration  to  the  South. 

The  South  is  a  huge  crescent  embracing  552  million  acres 
in  13  States  from  Virginia  on  the  east  to  Texas  on  the  west. 
It  has  widely  varying  topographic  conditions — vast 
prairies,  wooded  plains,  fertile  valleys,  and  the  highest 
mountains  in  the  eastern  United  States. 

The  transportation  facilities  of  the  South  are,  for  the 
most  part,  excellent.    It  is  covered  by  rail  lines  which  con- 
nect the  interior  with  ports  and  give  easy  access  to  other 
regions.    Both  the  Mississippi  and  the  Ohio  Rivers'  navi- 
es) 


gation  facilities  serve  the  South.  The  Warrior-Tombigbee 
system  taps  the  important  industrial  region  around  Birm- 
ingham, while  the  Tennessee  River  system,  now  being 
developed  by  the  Tennessee  Valley  Authority,  will  bring 
water  transportation  to  the  very  heart  of  the  Southeast. 
The  highways  of  the  South  are  well  advanced.  Roads  are 
built  cheaply  and  are  usable  in  all  seasons.  The  region 
is  well  served  by  air  lines.  Bordered  by  both  the  Atlantic 
and  the  Gulf,  the  South  has  ideal  harbors  and  many  fine 
ports.  Trade  with  Europe  has  been  important  for  three 
centuries.  Across  the  Gulf  and  Caribbean  the  South  can 
expect  further  trade  development. 

The  South  has  been  richly  endowed  with  physical  re- 
sources. No  other  region  offers  such  diversity  of  climate 
and  soil.  With  a  climate  ranging  from  temperate  to  sub- 
tropical, nearly  half  of  that  part  of  the  country  where 
there  is  a  f rostless  growing  season  for  more  than  6  months 
of  the  year  is  in  the  South.  Throughout  almost  the  entire 
South  there  is  ample  annual  rainfall  and  little  artificial 
irrigation  is  required. 

The  soils  of  the  South  are  the  most  widely  varied  of  the 
Nation.  Alabama,  a  typical  southern  State,  has  7  major 
types  and  almost  300  soil  subtypes.  These  soils  permit  the 
growing  of  a  wide  variety  of  products:  cotton,  tobacco, 
grains,  fruits,  melons,  vegetables,  potatoes,  hay,  nuts, 
sugar  cane,  and  hemp.  The  South  leads  the  world  in  pro- 
duction of  cotton  and  tobacco. 

Soil  and  climate  combine  to  give  it  forests  of  many 
kinds.  With  40  percent  of  the  Nation's  forests,  the  South 
has  found  its  woodlands  second  only  to  cotton  as  a  source 
of  wealth.  Approximately  30  percent  of  the  land  is  still 
in  forests.  Desi3ite  exploitation  and  abuse,  forests  still 
cover  almost  200,000,000  acres,  and  more  than  half  of  the 
country's  second-growth  saw  timber  is  in  the  South. 

The  region  leads  the  world  in  naval  stores  production. 
Because  southern  pine  reseeds  itself  and  grows  rapidly, 
the  South  has  great  potentialities  for  the  production  of 
paper. 


The  South  lags,  however,  in  the  production  of  livestock, 
despite  its  wealth  of  grasslands.  Its  20,000,000  cattle 
amount  to  less  than  a  third  of  the  total  found  on  American 
farms ;  and  because  of  the  poor  quality  of  many  of  them, 
the  value  of  the  annual  production  of  cattle  is  only  one- 
sixth  of  the  Nation's  total. 

Fish  and  game  are  as  plentiful  as  in  any  part  of  the 
country.    Louisiana  is  our  largest  raw  fur  producer. 

The  South  has  more  than  300  different  minerals :  Asbes- 
tos, asphalt,  barite,  bauxite,  clays,  coal,  diamonds,  feldspar, 
fluorspar,  gypsum,  lead,  limestone,  marble,  mercury,  phos- 
phate rock,  pyrites,  salt,  sand  and  gravel,  silica,  sulphur, 
zinc,  and  so  on  by  the  scores. 

With  less  than  2  percent  of  its  seams  so  far  tapped,  the 
Southeast  contains  a  fifth  of  the  Nation's  soft  coal.  It 
mines  a  full  tenth  of  our  iron  ore  annually,  but  it  produces 
only  slightly  more  than  7  percent  of  our  pig  iron. 

The  South  possesses  approximately  27  percent  of  the 
Nation's  instaUed  hydroelectric  generating  capacity, 
although  it  produces  only  21  percent  of  the  electric  power 
actually  generated.  The  region  contains  13  percent  of  the 
country's  undeveloped  hydroelectric  power. 

Nearly  two-thirds  of  the  Nation's  crude  oil  is  produced 
in  the  South,  and  over  two-thirds  of  our  supply  of  natural 
gas  comes  from  southern  fields.  In  1935  the  South  fur- 
nished about  half  of  the  country's  marble  output.  Florida 
and  Tennessee  produce  97  percent  of  all  our  phosphates, 
and  Texas  and  Louisiana  supply  over  99  percent  of  our 
sulphur. 

Commercial  fisheries  flourish  on  both  the  Atlantic  and 
Gulf  coasts.  Shore  fisheries  engaged  in  taking  oysters, 
clams,  menhaden,  mackerel,  sponges,  and  shrimp  are  espe- 
cially important. 

In  spite  of  this  wealth  of  population  and  natural  re- 
source, the  South  is  poor  in  the  machinery  for  converting 
this  wealth  to  the  uses  of  its  people.  With  28  percent  of 
the  Nation's  population,  it  has  only  16  percent  of  the 


tangible  assets,  including  factories,  machines,  and  the  tools 
with  which  people  make  their  living.  With  more  than 
half  the  country's  farmers,  the  South  has  less  than  a  fifth 
of  the  farm  implements.  Despite  its  coal,  oil,  gas,  and 
water  power,  the  region  uses  only  15  percent  of  the 
Nation's  factory  horsepower.  Its  potentialities  have  been 
neglected  and  its  opportunities  unrealized. 

The  paradox  of  the  South  is  that  while  it  is  blessed  by 
Nature  with  immense  wealth,  its  people  as  a  whole  are  the 
poorest  in  the  country.  Lacking  industries  of  its  own,  the 
South  has  been  forced  to  trade  the  richness  of  its  soil,  its 
minerals  and  forests,  and  the  labor  of  its  people  for  goods 
manufactured  elsewhere.  If  the  South  received  such  goods 
in  sufficient  quantity  to  meet  its  needs,  it  might  consider 
itself  adequately  paid. 


REPORT  TO  THE  PRESIDENT 

ON 

THE  ECONOMIC  CONDITIONS  OF 
THE  SOUTH 

Section  2 
SOIL 

Nature  gave  the  South  good  soil.  With  less  than  a  third 
of  the  Nation's  area,  the  South  contains  more  than  a  third 
of  the  Nation's  good  farming  acreage.  It  has  two-thirds 
of  all  the  land  in  America  receiving  a  40-ineh  annual  rain- 
fall or  better.  It  has  nearly  half  of  the  land  on  which  crops 
can  grow  for  6  months  without  danger  of  frost. 

This  heritage  has  been  sadly  exploited.  Sixty-one  per- 
cent of  all  the  Nation's  land  badly  damaged  by  erosion  is 
in  the  Southern  States.  An  expanse  of  southern  farm  land 
as  large  as  South  Carolina  has  been  gullied  and  washed 
away ;  at  least  22  million  acres  of  once  fertile  soil  has  been 
ruined  beyond  repair.  Another  area  the  size  of  Oklahoma 
and  Alabama  combined  has  been  seriously  damaged  by  ero- 
sion. In  addition,  the  sterile  sand  and  gravel  washed  off 
this  land  has  covered  over  a  fertile  valley  acreage  equal  in 
size  to  Maryland. 

There  are  a  number  of  reasons  for  this  wastage : 

Much  of  the  South 's  land  originally  was  so  fertile  that 
it  produced  crops  for  many  years  no  matter  how  carelessly 
it  was  farmed.  For  generations  thousands  of  southern 
farmers  plowed  their  furrows  up  and  down  the  slopes,  so 
that  each  furrow  served  as  a  ditch  to  hasten  the  run-off  of 
silt-laden  water  after  every  rain.  While  many  farmers 
have  now  learned  the  importance  of  terracing  their  land 
or  plowing  it  on  the  contours,  thousands  still  follow  the 
destructive  practices  of  the  past. 

(9) 


10 

Half  of  the  South 's  farmers  are  tenants,  many  of  whom 
have  little  interest  in  preserving  soil  they  do  not  own. 

The  South 's  chief  crops  are  cotton,  tobacco,  and  corn; 
all  of  these  are  inter-tilled  crops — the  soil  is  plowed  be- 
tween the  rows,  so  that  it  is  left  loose  and  bare  of  vege- 
tation. 

The  top-soil  washes  away  much  more  swiftly  than  from 
land  planted  to  cover  crops,  such  as  clover,  soybeans,  and 
small  grains.  Moreover,  cotton,  tobacco,  and  corn  leave 
few  stalks  and  leaves  to  be  plowed  under  in  the  fall;  and 
as  a  result  the  soil  constantly  loses  its  humus  and  its  capac- 
ity to  absorb  rainfall. 

Even  after  harvest,  southern  land  is  seldom  planted  to 
cover  crops  which  would  protect  it  from  the  winter  rains. 
This  increases  erosion  tenfold. 

Southeastern  farms  are  the  smallest  in  the  Nation.  The 
operating  units  average  only  71  acres,  and  nearly  one- 
fourth  of  them  are  smaller  than  20  acres.  A  farmer  with 
so  little  land  is  forced  to  plant  every  foot  of  it  in  cash 
crops ;  he  cannot  spare  an  acre  for  soil  restoring  crops  or 
pasture.  Under  the  customary  tenancy  system,  moreover, 
he  has  every  incentive  to  plant  all  his  land  to  crops  which 
will  bring  in  the  largest  possible  immediate  cash  I'eturn. 
The  landlord  often  encourages  him  in  this  destructive 
practice  of  cash-cropping. 

Training  in  better  agricultural  methods,  such  as  plant- 
ing soil-restoring  crops,  terracing,  contour-plowing,  and 
rotation,  has  been  spreading,  but  such  training  is  still  un- 
available to  most  southern  farmers.  Annually  the  South 
spends  considerably  more  money  for  fertilizer  than  for 
agricultural  training  through  its  land-grant  colleges,  ex- 
periment stations,  and  extension  workers. 

Forests  are  one  of  the  best  protections  against  erosion. 
Their  foliage  breaks  the  force  of  the  rain ;  their  roots  bind 
the  soil  so  that  it  cannot  wash  away;  their  fallen  leaves 
form  a  blanket  of  vegetable  cover  which  soaks  up  the  water 


11 

and  checks  run-off.  Yet  the  South  has  cut  away  a  large 
I)art  of  its  forest,  leaving  acres  of  gullied,  useless  soil. 
There  has  been  comparatively  little  effort  at  systematic 
reforestation.  Overgrazing,  too,  has  resulted  in  serious 
erosion  throughout  the  Southwest. 

There  is  a  close  relationship  between  this  erosion  and 
floods,  which  recently  have  been  causing  a  loss  to  the 
Nation  estimated  at  about  $35,000,000  annually.  Rainfall 
runs  off  uncovered  land  much  more  rapidly  than  it  does 
from  land  planted  to  cover  crops  or  forest.  Recent  studies 
indicate  that  a  single  acre  of  typical  corn  land  lost  ap- 
proximately 127,000  more  gallons  of  rainfall  in  a  single 
year  than  a  similar  field  planted  to  grass.  Another  experi- 
ment showed  that  land  sodded  in  grass  lost  less  than  1  per- 
cent of  a  heavy  rain  through  immediate  run-off,  while 
nearby  land  planted  to  cotton  lost  31  percent.  In  short, 
unprotected  land  not  only  is  in  danger  of  destruction;  it 
also  adds  materially  to  the  destructive  power  of  the  swollen 
streams  into  which  it  drains. 

These  factors — each  one  reenf orcing  all  the  others — are 
causing  an  unparalleled  wastage  of  the  South 's  most  valu- 
able asset,  its  soil.  They  are  steadily  cutting  down  its 
agricultural  income,  and  steadily  adding  to  its  cost  of 
production  as  compared  with  other  areas  of  the  world 
which  raise  the  same  crops. 

For  example,  it  takes  quantities  of  fertilizer  to  make 
worn-out,  eroded  land  produce.  The  South,  with  only  one- 
fifth  of  the  Nation's  income,  pays  three-fifths  of  the  Na- 
tion's fertilizer  bill.  In  1929  it  bought  5%  million  tons  of 
commercial  fertilizer  at  a  cost  of  $161,000,000.  And 
although  fertilizer  performs  a  valuable  and  necessary  serv- 
ice, it  does  not  restore  the  soil.  For  a  year  or  two  it  may 
nourish  a  crop,  but  the  land  still  produces  meagerly  and  at 
high  cost. 

Moreover,  southern  farmers  cannot  pile  on  fertilizer  fast 
enough  to  put  back  the  essential  minerals  which  are  wash- 
ing out  of  their  land.    Each  year,  about  27,500,000  tons  of 


12 

nitrogen  and  phosphorus  compounds  are  leached  out  of 
southern  soil  and  sent  down  the  rivers  to  the  sea. 

The  South  is  losing  more  than  $300,000,000  worth  of 
fertile  topsoil  through  erosion  every  year.  This  is  not 
merely  a  loss  of  income — it  is  a  loss  of  irreplaceable 
capital. 


REPORT  TO  THE  PRESIDENT 

ON 

THE  ECONOMIC  CONDITIONS  OF 
THE  SOUTH 

Section  3 
WATER 

The  water  resources  of  the  South  are  abundant.  Except 
on  its  western  fringe,  it  is  generously  supplied  with  waters 
for  municipal  use,  for  electric  power,  for  navigation,  and 
for  crop  production.  Inefficient  control  or  use  of  these 
waters  has  impaired  their  value  in  some  areas,  while  in 
other  areas  their  very  superabundance  has  retarded  eco- 
nomic development. 

Many  communities  need  better  systems  of  public  water 
supply.  In  the  coastal  plain  and  in  the  States  west  of  the 
Mississippi  deep  wells  generally  tap  water  of  good  quality. 
The  quantity  of  such  underground  sources  is  ample  for 
most  commimities,  but  in  a  number  of  instances  they  have 
been  depleted  by  overdraft  and  by  waste.  With  the  excep- 
tion of  the  seaports  and  older  river  ports,  the  larger  south- 
ern cities  and  the  industrial  towns  have  grown  up  on  the 
Piedmont  and  upland  regions  where  groundwaters  are 
more  meager.  Many  are  in  headwater  areas  having  only 
small  stream-flow  during  the  summer  months.  Pollution 
of  such  streams  by  cities  and  towns  has  impaired  public 
health  and  has  restricted  their  recreational  and  industrial 
use.  In  these  and  other  areas  insufficient  provision  has 
been  made  for  waste  disposal  to  keep  the  streams  pure. 

In  much  of  the  South  the  combination  of  heavy  rainfall, 
relatively  large  stream  flow,  and  favorable  topography  has 
made  possible  great  developments  of  water  power.    Hydro- 

(13) 


14 

electric  plants  with  an  installed  capacity  of  approximately 
4  million  horsepower  have  been  constructed,  and  the  result- 
ing power  is  of  vital  importance  to  the  southern  economy. 
In  1937,  hydroelectric  developments  in  the  Carolinas,  Geor- 
gia, and  Alabama  supplied  about  85  percent  of  all  power 
produced  for  public  utilities  in  that  area;  whereas  hydro- 
electric power  contributed  only  37  percent  of  the  total 
power  produced  for  public  utilities  in  the  United  States 
as  a  whole.  Even  greater  resources  lie  undeveloped.  It  is 
estimated  that  the  potential  output  of  feasible  undeveloped 
power  sites  in  the  South  would  be  five  times  the  hydroelec- 
tric power  actually  produced  in  1937.  These  power  re- 
serves constitute  a  rich  as^et  to  be  utilized  as  the  markets 
of  the  South  grow. 

In  the  Mississippi  Valley,  along  the  Gulf  coast  and  much 
of  the  South  Atlantic  coast,  the  settlement  of  the  country 
followed  the  numerous  waterways.  Although  the  signifi- 
cance of  river  transportation  is  not  generally  recognized, 
it  is  of  growing  importance  along  the  Mississippi  River, 
on  the  Warrior-Tombigbee  system,  and  in  the  extensive 
improvements  in  progress  in  the  Tennessee  Basin.  An 
intra-coastal  waterway  now  provides  a  safe  route  for  ves- 
sels of  moderate  draft  along  three-fourths  of  the  southern 
coast.  Channel  deepening  has  provided  free  access  for 
ocean  shipping  to  such  inland  ports  as  Richmond,  Jackson- 
ville, Beaumont,  and  Houston. 

Most  sections  receive  adequate  rainfall  for  crop  produc- 
tion. Only  2,630,000  acres  have  been  improved  by  irriga- 
tion. Of  this  acreage,  some  of  the  more  prosperous  part  is 
used  for  vegetable,  rice,  and  citrus-fruit  production.  In 
the  semiarid  western  sections,  except  in  the  lower  Rio 
Grande  Valley,  irrigation  is  in  the  developmental  stage, 
and  its  economic  possibilities  have  not  been  explored  fully. 

Throughout  most  of  the  South  an  overabundance,  not 
scarcity,  of  water  limits  the  agricultural    use    of    fertile 


15 

lands.  By  means  of  drainage  more  than  22,000,000  acres 
of  wet  land  have  been  reclaimed.  Some  of  these  drained 
lands  are  the  most  fertile  in  the  South,  and  they  are  capable 
of  affording  a  refuge  for  farmers  who  have  exhausted  the 
eroding  upland  soils.  Additional  acreage  can  be  brought 
to  use  as  fast  as  the  costs  of  drainage  land-conditioning 
permit.  However,  a  large  part  of  the  drained  land  now 
lies  idle,  and  in  some  areas  the  drainage  enterprises  are 
poorly  coordinated. 

The  settlement  of  wet  lands  has  been  retarded  in  i^art  by 
malaria.  The  ''fever"  takes  a  heavy  annual  toll  in  human 
life  and  vitality.  It  is  particularly  widespread  in  those 
rural  areas  where  drainage  is  inadequate. 

Uncontrolled  flood  waters  likewise  impose  severe  dam- 
ages on  the  South.  Much  of  its  fertile  farming  land  and 
many  of  its  important  cities  lie  within  reach  of  floods. 
Vast  sections  of  the  alluvial  valley  of  the  Mississippi — 
31,000  square  miles  of  fertile  land  with  a  population  of 
more  than  2,000,000 — and  numerous  communities  on  other 
southern  rivers,  are  within  the  danger  zone.  In  the  allu- 
vial valley  alone  three-quarters  of  a  million  people  were 
driven  from  their  homes  by  the  flood  of  1927.  Property 
damage  from  this  flood  was  $220,000,000. 

To  consider  another  aspect  of  the  South 's  water  re- 
sources the  once  rich  fisheries  are  being  depleted,  on  the 
one  hand,  and  the  wildlife  and  recreational  facilities  de- 
veloped only  meagerly  on  the  other.  This  is  true  notwith- 
standing that  the  shallow  sounds  along  the  coasts  are  im- 
portant wintering  grounds  for  game  varieties  of  waterfowl 
and  that  the  sport  fishing  along  the  coasts  and  in  the  inner 
sounds  is  truly  notable. 

In  addition  to  their  value  as  recreation  grounds,  these 
areas  are  also  of  tremendous  importance  as  sources  of  sea 
food.  But  their  value  both  as  sources  of  food  for  the 
Nation  and  as  a  means  of  livelihood  for  those  engaged  in 
commercial  fishing  and  shellfishing,  is  threatened  by  over- 
fishing and,  in  a  few  places,  by  water  pollution. 


16 

The  South  is  only  now  becoming  aware  of  the  fortune  it 
has  in  its  vast  water  resources — the  value  in  transporta- 
tion, power,  fish,  and  game,  and  in  health  and  recreation. 
It  has  just  begun  to  consider  the  problems  involved  in 
conserving  this  many-sided  resource,  in  curbing  the  de- 
structive power  of  water  and  making  it  useful. 


REPORT  TO  THE  PRESIDENT 

ON 

THE  ECONOMIC  CONDITIONS  OF 
THE  SOUTH 

Section  4 
POPULATION 

The  population  of  the  South  is  growing  more  rapidly  by 
natural  increase  than  that  of  any  other  region.  Its  excess 
of  births  over  deaths  is  10  per  thousand,  as  compared  with 
the  national  average  of  7  per  thousand ;  and  already  it  has 
the  most  thickly  populated  rural  area  in  the  United  States. 
Of  the  108,600,000  native-born  persons  in  the  country  in 
1930,  28,700,000  were  born  in  the  Southeast,  all  but  4,600,- 
000  in  rural  districts. 

These  rural  districts  have  exported  one-fourth  of  their 
natural  increase  in  sons  and  daughters.  They  have  sup- 
plied their  own  growth,  much  of  the  growth  of  southern 
cities,  and  still  have  sent  great  numbers  into  other  sections. 
Of  these  southerners  born  in  rural  areas,  only  17,500,000 
live  in  the  locality  where  they  were  born,  and  3,800,000 
have  left  the  South  entirely. 

This  migration  has  taken  from  the  South  many  of  its 
ablest  people.  Nearly  half  of  the  eminent  scientists  bom 
in  the  South  are  now  living  elsewhere.  While  some  of 
these  have  been  replaced  by  scientists  from  other  sections 
of  the  country,  the  movement  from  the  South  has  been 
much  greater  than  this  replacement.  The  search  for  wider 
opportunities  than  are  available  in  the  overcrowded,  eco- 
nomically undeveloped  southern  communities  drains  away 
people  from  every  walk  of  life.  About  one  child  of  every 
eight  born  and  educated  in  Alabama  or  Mississippi  con- 
tributes his  life's  productivity  to  some  other  State. 

(17) 
84767°— 38 3 


18 

The  expanding  southern  population  likewise  has  a 
marked  effect  on  the  South 's  economic  standards.  There 
are  fewer  productive  adult  workers  and  more  dependents 
per  capita  than  in  other  sections  of  the  country.  The  ex- 
port of  population  reflects  the  failure  of  the  South  to  pro- 
vide adequate  opportunities  for  its  people. 

The  largely  rural  States  of  the  South  must  support 
nearly  one-third  of  their  population  in  school,  while  the 
industrial  States  su^^port  less  than  one-fourth.  Moreover, 
in  their  search  for  jobs  the  i)roductive  middle-age  groups 
leave  the  South  in  the  greatest  numbers,  tending  to  make 
the  South  a  land  of  the  very  old  and  the  very  young.  A 
study  of  one  southern  community  in  1928  showed  that 
about  30  percent  of  the  households  were  headed  by  women 
past  middle  age.  Since  1930  most  of  these  women,  for- 
merly able  to  live  by  odd  jobs  and  gardening,  have  gone  on 
relief.  Relief  studies  in  the  eastern  Cotton  Belt  have 
shown  recently  that  15  percent  of  the  relief  households 
were  without  a  male  over  16  years  of  age  and  15  percent 
more,  or  31  percent  altogether,  were  without  any  employ- 
able male.  Even  if  the  southern  workers  were  able,  there- 
fore, to  secure  wages  equal  to  those  of  the  North  on  a  per 
capita  basis  dollar  for  dollar,  a  great  gap  would  still  re- 
main between  the  living  standards  of  southern  families 
and  those  of  other  regions. 

Recent  figures  indicate  a  slowing  down  of  the  migration 
to  cities.  In  general,  too,  the  rural  population  has  in- 
creased most  rapidly  in  those  sections  where  the  land  is 
poorest.  Thus  the  Appalachian  and  Ozark  areas  have 
shown  a  rapid  increase,  while  the  old  black-belt  cotton 
counties  and  Mississippi  Delta  counties  have  shown  little 
or  no  gains.  This  has  brought  about  an  intensification  of 
the  problem  of  earning  a  living  in  the  South. 

Big  families  have  been  growing  up  on  the  average  south- 
ern farm  in  recent  generations.  When  the  children  reach 
maturity,  either  some  of  the  older  ones  have  to  move  away 


19 

and  find  jobs  in  industry  or  trade,  or  the  family  farm — 
already  too  small — must  be  cut  into  smaller  farms. 

For  many  years  after  the  War  between  the  States,  there 
was  a  general  tendency  to  reduce  the  size  of  farms,  but 
about  1910  a  contrary  movement  began  which  partially  off- 
set this  tendency.  Nevertheless,  because  of  the  decrease 
in  tillable  land,  in  the  older  Southern  States  east  of  Texas, 
the  farm  acreage  was  actually  less  in  1930  than  in  I860, 
though  the  rural  population  had  nearly  doubled.  In  1930 
there  were  nearly  twice  as  many  southern  farms  less  than 
20  acres  in  size  as  in  1880.  These  figures  indicate  serious 
maladjustment  between  the  people  and  the  land,  and  a 
consequent  misuse  of  resources. 

In  certain  sections  there  has  been  a  tendency  to  revert 
to  large  plantations  worked  by  machinery  on  an  industrial 
basis.  Tractors  and  gang  plows  are  substituted  for  men 
and  mules.  This  method  of  cutting  operating  costs  also 
cuts  the  number  of  people  needed  for  a  given  area  of  land 
or  amount  of  crop.  Farm  unemployment  constitutes  a 
large  proportion  of  the  South 's  unemployment  problem. 
This  tendency  is  further  disarranging  the  relationship  be- 
tween the  people  and  the  land.  No  longer  owners,  tenants, 
or  croppers,  the  workers  in  these  agricultural  factories  are 
more  nearly  day  laborers — unskilled  workers  who  can  be 
hired  one  day  and  fired  the  next. 

It  has  been  estimated  that  nearly  3,000,000  young  people 
matured  into  the  15-25  age  group  between  1930  and  1935 
in  the  rural  districts  of  11  southeast  States.  Barely  half 
a  million  took  places  left  open  by  death;  about  the  same 
number  stayed  in  school;  and  the  increase  in  number  of 
farms,  mostly  substistence  farms,  took  care  of  about  a 
quarter  of  a  million.  Eemaining  are  some  1,750,000  who 
stay  in  the  farm  home  as  casual  laborers  or  as  unemployed. 

Increasing  competition  for  jobs  has  also  upset  the  bal- 
ance of  employment  between  white  and  Negro.  Unem- 
ployment among  white  people  has  caused  them  to  seek  jobs 
which  were  traditionally  filled  only  by  Negroes  in  the 


20 

South.  The  field  for  the  emplojTuent  of  Negroes  has  con- 
sequently been  further  constricted,  causing  greater  migra- 
tion. The  lack  of  opportunity  and  the  resulting  job  com- 
petition has  lowered  the  living  standards  of  both  white  and 
Negro  workers  in  the  South. 

The  population  problems  of  the  South — ^the  dispropor- 
tion of  adult  workers  to  dependents,  the  displacement  of 
agricultural  workers  by  machines,  the  substitution  of  white 
workers  in  traditionally  Negro  occupations,  the  emigra- 
tion of  skilled  and  educated  productive  workers — are  the 
most  pressing  of  any  America  must  face.  They  are  not 
local  problems  alone.  With  the  South  furnishing  the  basis 
for  the  population  increase  of  the  Nation,  with  southern 
workers  coming  into  other  sections  of  the  country  in  quest 
of  opportimi ty,  with  the  South 's  large  potential  market 
for  the  Nation's  goods,  these  problems  are  national. 


REPORT  TO  THE  PRESIDENT 

ON 

THE  ECONOMIC  CONDITIONS  OF 
THE  SOUTH 

Section  5 
PRIVATE  AND  PUBLIC  INCOME 

The  wealth  of  natural  resources  in  the  South — its  for- 
ests, minerals,  and  fertile  soil — benefit  the  South  only  when 
they  can  be  turned  into  goods  and  services  which  its  peo- 
ple need.  So  far  the  South  has  enjoyed  relatively  little 
of  these  benefits,  simply  because  it  has  not  had  the  money 
or  credit  to  develop  and  purchase  them. 

Ever  since  the  War  between  the  States  the  South  has  been 
the  poorest  section  of  the  Nation.  The  richest  State  in 
the  South  ranks  lower  in  per  capita  income  than  the  poor- 
est State  outside  the  region.  In  1937  the  average  income 
in  the  South  was  $314;  in  the  rest  of  the  country  it  was 
$604,  or  nearly  twice  as  much. 

Even  in  ''prosperous"  1929  southern  farm  people  re- 
ceived an  average  gross  income  of  only  $186  a  year  as  com- 
pared with  $528  for  faraiers  elsewhere.  Out  of  that  $186 
southern  farmers  had  to  pay  all  their  operating  expenses — 
tools,  fertilizer,  seed,  taxes,  and  interest  on  debt — so  that 
only  a  fraction  of  that  smn  was  left  for  the  purchase  of 
food,  clothes,  and  the  decencies  of  life.  It  is  hardly  sur- 
prising, therefore,  that  such  ordinary  items  as  automo- 
biles, radios,  and  books  are  relatively  rare  in  many  south- 
ern country  areas. 

For  more  than  half  of  the  South 's  farm  families — ^the 
53  percent  who  are  tenants  without  land  of  their  own — 
incomes  are  far  lower.    Many  thousands  of  them  are  living 

(21) 


22 

in  poverty  comparable  to  that  of  the  poorest  peasants  in 
Europe.  A  recent  study  of  southern  cotton  plantations 
indicated  that  the  average  tenant  family  received  an  in- 
come of  only  $73  per  i)erson  for  a  year's  work.  Earnings 
of  share  croppers  ranged  from  $38  to  $87  per  person,  and 
an  income  of  $38  annually  means  only  a  little  more  than 
10  cents  a  day. 

The  South 's  industrial  wages,  like  its  farm  income,  are 
the  lowest  in  the  United  States.  In  1937  common  labor 
in  20  important  industries  got  16  cents  an  hour  less  than 
laborers  in  other  sections  received  for  the  same  kind  of 
work.  Moreover,  less  than  10  percent  of  the  textile  work- 
ers are  paid  more  than  52.5"  cents  an  hour,  while  in  the  rest 
of  the  Nation  25  percent  rise  above  this  level.  A  recent 
survey  of  the  South  disclosed  that  the  average  annual  wage 
in  industry  was  only  $865  while  in  the  remaining  States  it 
averaged  $1,219. 

In  income  from  dividends  and  interest  the  South  is  at  a 
similar  disadvantage.  In  1937  the  per  capita  income  in  the 
South  from  dividends  and  interest  was  only  $17,55  as  com- 
pared with  $68.97  for  the  rest  of  the  country. 

Since  the  South 's  people  live  so  close  to  the  poverty  Une, 
its  many  local  political  subdivisions  have  had  great  diffi- 
culty in  providing  the  schools  and  other  public  services 
necessary  in  any  civilized  community.  In  1935  the  as- 
sessed value  of  taxable  property  in  the  South  averaged 
only  $463  per  person,  while  in  the  nine  Northeastern  States 
it  amounted  to  $1,370.  In  other  words,  the  Northeastern 
States  had  three  times  as  much  property  per  person  to 
support  their  schools  and  other  institutions. 

Consequently,  the  South  is  not  able  to  bring  its  schools 
and  many  other  public  services  up  to  national  standards, 
even  though  it  tax  the  available  wealth  as  heavily  as  any 
other  section.  In  1936  the  State  and  local  governments 
of  the  South  collected  only  $28.88  per  person  while  the 


States  and  local  goveiiunents  of  the  Nation  as  a  whole 
collected  $51,54  per  person. 

Although  the  South  has  28  percent  of  the  country's 
population,  its  Federal  income-tax  collections  in  1934  were 
less  than  12  percent  of  the  national  total.  These  collections 
averaged  only  $1.28  per  capita  throughout  the  South,  rang- 
ing from  24  cents  in  Mississippi  to  $3.53  in  Florida. 

So  much  of  the  profit  from  southern  industries  goes  to 
outside  financiers,  in  the  form  of  dividends  and  interest, 
that  State  income  taxes  would  produce  a  meager  yield  in 
comparison  with  similar  levies  elsewhere.  State  taxation 
does  not  reach  dividends  which  flow  to  corporation  stock- 
holders and  management  in  other  States ;  and,  as  a  result, 
these  people  do  not  pay  their  share  of  the  cost  of  southern 
schools  and  other  institutions. 

Under  these  circumstances  the  South  has  piled  its  tax 
burden  on  the  backs  of  those  least  able  to  pay,  in  the  form 
of  sales  taxes.  (The  poll  tax  keeps  the  i^oorer  citizens  from 
voting  in  eight  southern  States ;  thus  they  have  no  effective 
means  of  protesting  against  sales  taxes.)  In  every  south- 
ern State  but  one,  59  percent  of  the  revenue  is  raised  by 
sales  taxes.  In  the  northeast,  on  the  other  hand,  not  a 
single  State  gets  more  than  44  percent  of  its  income  from 
this  source,  and  most  of  them  get  far  less. 

The  efforts  of  southern  communities  to  increase  their 
revenues  and  to  spread  the  tax  burden  more  fairly  have 
been  impeded  by  the  vigorous  opposition  of  interests  out- 
side the  region  which  control  much  of  the  South 's  wealth. 
Moreover,  tax  revision  efforts  have  been  hampered  in  some 
sections  by  the  fear  that  their  industries  would  move  to 
neighboring  communities  which  would  tax  them  more 
lightly — or  even  grant  them  tax  exemption  for  long 
periods. 

The  hope  that  industries  would  bring  with  them  better 
living  conditions  and  consequent  higher  tax  revenues  often 


24 

has  been  defeated  by  the  competitive  tactics  of  the  com- 
munities themselves.  Many  southern  towns  have  found 
that  industries  which  are  not  willing  to  pay  their  fair 
share  of  the  cost  of  public  services  likewise  are  not  willing 
to  pay  fair  wages,  and  so  add  little  to  the  community's 
wealth. 


REPORT  TO  THE  PRESIDENT 

ON 

THE  ECONOMIC  CONDITIONS  OF 
THE  SOUTH 

Section  6 
EDUCATION 

Great  numbers  of  Americans  are  continually  moving 
from  one  region  to  another.  This  makes  poor  schooling 
in  any  region  a  matter  of  national  concern.  Illiteracy, 
poor  training,  lack  of  education,  go  along  with  those  mi- 
grating people  who  have  not  had  schools.  The  fact  that 
the  South  is  the  source  of  a  considerable  part  of  the  rest 
of  the  Nation's  population  makes  the  South 's  difficulties 
in  providing  school  facilities  a  national  problem. 

In  the  United  States  as  a  whole  it  is  more  possible  than 
ever  before  to  supply  training  for  children  and  young 
people.  The  child  population  has  only  doubled  since 
1880,  while  the  adult  population  has  increased  more  than 
threefold.  Too,  the  productive  capacity  per  worker  today 
is  far  in  excess  of  what  it  was  50  years  ago.  In  the  South, 
however,  owing  to  the  higher  birth  rate  and  to  the  migra- 
tion of  adult  workers,  the  proportion  of  productive  work- 
ers to  school  children  is  much  lower  than  elsewhere  in  the 
country.  A  study  of  this  condition  in  1930  showed  that 
there  were  10  adults  to  6  children  as  compared  to  10  adults 
for  4  children  in  the  North  and  West. 

In  the  rural  regions  of  the  South,  particularly,  there  is  a 
marked  disparity  between  the  number  of  children  to  be 
educated  and  the  means  for  educating  them.  For  example, 
in  1930  the  rural  inhabitants  of  the  Southeast  had  to  care 
for  4,250,000  children  of  school  age  of  the  coimtry's  total, 
although  they  received  an  income  of  only  about  2  per- 

(25) 


26 

cent  of  the  Nation's  total.  In  the  nonfarm  population 
of  the  Northeast,  on  the  other  hand,  there  were  8,500,000 
children  in  a  group  that  received  42  percent  of  the  total 
national  income — 21  times  as  much  income  available  to 
educate  only  twice  as  many  children. 

This  disparity  in  the  educational  load,  which  bears  so 
heavily  on  the  South,  continues.  In  1936  the  rate  *of 
natural  increase  in  the  population  was  greatest  in  the 
southeastern  and  southwestern  sections  of  the  United 
States,  precisely  where  the  lack  of  educational  opportunity 
is  already  most  pronounced. 

The  southern  regions  are  affected  by  population  shifts 
more  than  other  sections  because  the  greatest  proportion 
of  movers  originate  there.  In  the  1920 's  the  States  south 
of  the  Potomac  and  Ohio  Rivers  and  east  of  the  Mississippi 
lost  about  1,700,000  persons  through  migration,  about  half 
of  whom  were  between  15  and  35  years  of  age.  These  per- 
sons moved  at  the  beginning  of  their  productive  life  to 
regions  which  got  this  manpower  almost  free  of  cost, 
whereas  the  South,  which  had  borne  the  expense  of  their 
care  and  education  up  to  the  time  when  they  could  start 
producing,  suffered  an  almost  complete  loss  of  its  invest- 
ment. The  newcomers  to  the  South  did  not,  by  any  means, 
balance  this  loss.  The  cost  of  rearing  and  schooling  the 
young  people  of  the  southern  rural  districts  who  moved 
to  cities  has  been  estimated  to  be  approximately  $250,000,- 
000  annually. 

The  South  must  educate  one-third  of  the  Nation's  chil- 
dren with  one-sixth  of  the  Nation's  school  revenues.  Ac- 
cording to  the  most  conservative  estimates,  the  per  capita 
ability  of  the  richest  State  in  the  country  to  support  edu- 
cation is  six  times  as  great  as  that  of  the  poorest  State. 

Although  southern  teachers  compare  favorably  with 
teachers  elsewhere,  the  average  annual  salary  of  teachers 
in  Arkansas  for  1933-34  was  $465,  compared  to  $2,361  for 
New  York  State  for  the  same  year,  and  in  no  one  of  the 
Southern  States  was  the  average  salary  of  teachers  equal 


27 

to  the  average  of  the  Nation.  In  few  places  in  the  Nation, 
on  the  other  hand,  is  the  number  of  pupils  per  teacher 
higher  than  as  in  the  South.  Overcrowding  of  schools, 
particularly  in  rural  areas,  has  lowered  the  standards  of 
education,  and  the  short  school  terms  of  southern  rural 
schools  further  reduce  their  effectiveness. 

In  the  South  only  16  percent  of  the  children  enrolled  in 
school  are  in  high  school  as  compared  with  24  percent  in 
States  outside  the  South. 

Higher  education  in  the  South  has  lagged  far  behind  the 
rest  of  the  Nation.  The  total  endowments  of  the  colleges 
and  universities  of  the  South  are  less  than  the  combined 
endowments  of  Yale  and  Harvard.  As  for  medical  schools, 
the  South  does  not  have  the  facilities  to  educate  sufficient 
doctors  for  its  own  needs. 

Since  adequate  schools  and  other  means  of  public  edu- 
cation are  indispensable  to  the  successful  functioning  of  a 
democratic  nation,  the  country  as  a  whole  is  concerned 
with  the  South 's  difficulty  in  meeting  its  problem  of 
education. 

Illiteracy  was  higher  in  1930  in  the  Southern  States  than 
in  any  other  region,  totaling  8.8  percent.  The  North  Cen- 
tral States  had  a  percentage  of  1.9.  New  England  and  the 
Middle  Atlantic  States  combined  had  a  percentage  of  3.5. 
In  the  South  the  percentages  ranged  from  2.8  in  Oklahoma 
to  14.9  in  South  Carolina.  Every  State  in  the  South  ex- 
cept Oklahoma  had  a  percentage  higher  than  6.5  percent. 

But  the  poor  educational  status  of  the  South  is  not  a 
result  of  lack  of  effort  to  support  schools.  The  South  col- 
lects in  total  taxes  about  half  as  much  per  person  as 
the  Nation  as  a  whole.  All  Southern  States  fall  below  the 
national  average  in  tax  resources  per  child,  although  they 
devote  a  larger  share  of  their  tax  income  to  schools.  For 
the  Southern  States  to  spend  the  national  average  per 
pupil  would  require  an  additional  quarter  of  a  billion  dol- 
lars of  revenue. 


28 

Between  1933  and  1935  more  than  $21,000,000  of  Federal 
funds  were  necessary  to  keep  rural  schools  open,  and  more 
than  80  percent  of  this  amount  was  needed  in  the  South, 
where  local  and  State  goveriunents  were  unable  to  carry 
the  burden. 

In  1936  the  Southern  States  spent  an  average  of  $25.11 
per  child  in  schools,  or  about  half  the  average  for  the 
country  as  a  whole,  or  a  quarter  of  what  was  spent  per 
child  in  New  York  State.  In  1935-36  the  average  school 
child  enrolled  in  Mississippi  had  $27.47  spent  on  his  educa- 
tion. At  the  same  time  the  average  school  child  enrolled 
in  New  York  State  had  $141.43  spent  on  his  education,  or 
more  than  five  times  as  much  as  was  spent  on  a  child  in 
Mississippi.  There  were  actually  1,500  school  centers  in 
Mississippi  without  school  buildings,  requiring  children 
to  attend  school  in  lodge  halls,  abandoned  tenant  houses, 
country  churches,  and,  in  some  instances,  even  in  cotton 
pens. 


REPORT  TO  THE  PRESIDENT 

ON 

THE  ECONOMIC  CONDITIONS  OF 
THE  SOUTH 

Section  7 
HEALTH 

For  years  evidence  has  been  piling  up  that  food,  cloth- 
ing, and  housing  influence  not  only  the  sickness  rate  and 
death  rate  but  even  the  height  and  weight  of  school  chil- 
dren. In  the  South,  where  family  incomes  are  exception- 
ally low,  the  sickness  and  death  rates  are  unusually  high. 
Wage  differentials  become  in  fact  differentials  in  health 
and  life ;  poor  health,  in  turn,  affects  wages. 

The  low-income  belt  of  the  South  is  a  belt  of  sickness, 
misery,  and  unnecessary  death.  Its  large  proportion  of 
low-income  citizens  are  more  subject  to  disease  than  the 
people  of  any  similar  area.  The  climate  cannot  be 
blamed — the  South  is  as  healthful  as  any  section  for  those 
who  have  the  necessary  care,  diet,  and  freedom  from 
occupational  disease. 

Several  years  ago  the  United  States  Public  Health  Serv- 
ice conducted  syphilis-control  demonstrations  in  selected 
rural  areas  in  the  South.  These  studies  revealed  a  much 
higher  ratio  of  syphilis  among  Negroes  than  among  whites, 
but  showed  further  that  this  higher  ratio  was  not  due  to 
physical  differences  between  the  races.  It  was  found  to 
be  due  to  the  greater  poverty  and  lower  living  conditions 
of  the  Negroes.  Similar  studies  of  such  diseases  have 
shown  that  individual  health  cannot  be  separated  from 
the  health  of  the  community  as  a  whole. 

The  presence  of  malaria,  which  infects  annually  more 
than  2,000,000  people,  is  estimated  to  have  reduced  the 

(29) 


30 

industrial  output  of  the  South  one-third.  One  of  the  most 
striking  examples  of  the  effect  of  malaria  on  industry  was 
revealed  by  the  Public  Health  Service  in  studies  among 
employees  of  a  cotton  mill  in  eastern  North  Carolina.  Pre- 
vious to  the  attempts  to  control  malaria,  the  records  of  the 
mill  one  month  showed  66  looms  were  idle  as  a  result  of 
ill-health.  After  completion  of  control  work,  no  looms 
were  idle  for  that  reason.  Before  control  work,  238,046 
pounds  of  cloth  were  manufactured  in  one  month.  After 
completion  of  the  work  production  rose  to  316,804  pounds 
in  one  month — an  increase  of  33y3  percent. 

In  reports  obtained  in  1935  from  9  lumber  companies, 
owning  14  sawmill  villages  in  5  southern  States,  there  was 
agreement  that  malaria  was  an  important  and  increasing 
problem  among  the  employees.  During  the  year  7.6  per- 
cent of  hospital  admissions,  16.4  percent  of  physician  calls, 
and  19.7  percent  of  dispensary  drugs  were  for  malaria. 
The  average  number  of  days  off  duty  per  case  of  malaria 
was  9,  while  days  in  the  hospital  for  the  same  cause  were 
5.  Ten  railroads  in  the  South  listed  malaria  as  an  eco- 
nomic problem  and  a  costly  liability.  Four  utility  com- 
panies had  full-time  mosquito-fighting  crews  at  work  dur- 
ing the  year.  The  average  case  admitted  to  a  company  hos- 
pital lasted  3  days  and  the  average  number  of  days  off  duty 
because  of  malaria  was  11.  Each  case  of  malaria  was  said 
to  cost  the  companies  $40. 

If  we  attempt  to  place  a  monetary  value  on  malaria  by 
accepting  the  figure  of  $10,000  as  the  value  of  an  average 
life  and  using  the  death  rate  of  3.943  for  malaria  reported 
by  the  census  for  1936,  the  annual  cost  of  deaths  from  this 
disease  is  $39,500,000.  To  this  figure  could  be  added  the 
cost  of  illness,  including  days  of  work  lost. 

The  health-protection  facilities  of  the  South  are  limited. 
For  example,  there  are  only  one-third  as  many  doctors  per 
capita  in  South  Carolina  as  there  are  in  California.  The 
South  is  deficient  in  hospitals  and  clinics,  as  well  as  in 
health  workers.    Many  counties  have  no  facilities  at  all. 


31 

The  South  has  only  begun  to  look  into  its  pressing  indus- 
trial hygiene  problems,  although  it  has  26  percent  of  the 
male  mine  workers  in  the  United  States  and  14  percent  of 
the  male  factory  workers.  These  are  the  workers  with 
which  modem  industrial  health  protection  is  most 
concerned. 

The  experience  as  to  pneumonia  and  tuberculosis  among 
employees  of  the  Tennessee  Coal,  Iron  &  Railroad  Co.  and 
their  dependents  during  the  11-year  period  from  1925  to 
1935  gives  an  indication  of  health  conditions  among  miners 
in  the  South.  The  situation  generally  is  probably  worse 
than  shown  by  the  figures  for  this  company,  whose  workers 
have  relatively  better  protection  against  disease.  For  this 
period  the  number  under  observation  averaged  slightly 
more  than  77,000  persons.  There  were  3,780  cases  of  pneu- 
monia, of  which  739  terminated  fatally.  This  resulted  in 
an  average  frequency  per  1,000  of  approximately  4.9  pneu- 
monia cases  per  year  among  surface  workers,  4.7  among 
coal  miners,  and  10.6  among  ore  miners.  The  rate  of  4.2 
for  dependents  included  also  the  pneumonia  of  childhood 
and  infancy.  A  fatality  rate  of  30.7  deaths  per  1,000  cases 
of  pneumonia  was  found  among  surface  workers,  a  rate  of 
26.8  among  coal  miners,  and  24.8  among  ore  miners. 
Deaths  from  tuberculosis  occurred  at  an  annual  rate  of 
1.467  per  thousand  workers  among  coal  miners,  1.232 
among  ore  miners,  and  0.566  among  surface  workers. 

Prior  to  1936  only  one  State  in  the  South  gave  consider- 
ation to  industrial  hygiene.  Today,  with  the  aid  of  Social 
Security  funds,  seven  additional  States  have  industrial- 
hygiene  units,  and  approximately  7,000,000  of  the  10,000,- 
000  gainful  workers  are  receiving  some  type  of  industrial- 
hygiene  service.  However,  these  industrial-hygiene  units 
have  started  their  programs  only  recently,  and  it  will  be 
some  time  before  adequate  health  services  will  be  available. 
The  funds  now  being  spent  for  this  activity  in  the  eight 
States  which  have  industrial-hygiene  services  do  not  meet 
the  problem  of  protecting  and  improving  the  health  of 


32 

these  workers.  Approximately  $100,000  is  now  being  bud- 
geted for  this  work,  although  it  is  known  that  the  economic 
loss  due  to  industrial  injuries  and  illnesses  among  these 
workers  is  hundreds  of  millions  of  dollars. 

Reports  of  one  of  the  largest  life-insurance  companies 
show  that  more  people  in  the  southern  area  than  elsewhere 
die  without  medical  aid.  The  same  company  reported  in  a 
recent  year  a  rise  of  7.3  percent  in  the  death  rate  in  the 
nine  South  Atlantic  States,  though  in  no  other  region  had 
the  death  rate  risen  above  4.8  percent,  and  in  some  sections 
it  had  declined. 

The  scourge  of  pellagra,  that  affects  the  South  almost 
exclusively,  is  a  disease  chiefly  due  to  inadequate  diet;  it 
responds  to  rather  simple  preventive  measures,  including 
suitable  nourishing  food.  Even  in  southern  cities  from  60 
to  88  percent  of  the  families  of  low  incomes  are  spending 
for  food  less  than  enough  to  purchase  an  adequate  diet. 


REPORT  TO  THE  PRESIDENT 

ON 

THE  ECONOMIC  CONDITIONS  OF 
THE  SOUTH 

Section  8 
HOUSING 

The  effects  of  bad  housing  can  be  measured  directly 
in  the  general  welfare.  It  lessens  industrial  efficiency, 
encourages  inferior  citizenship,  lowers  the  standard  of 
family  life,  and  deprives  people  of  reasonable  comfort. 
There  are  also  direct  relationships  between  poor  housing 
and  poor  health,  and  between  poor  housing  and  crime. 

The  type  of  slum  most  usual  in  southern  towns  consists 
of  antiquated,  poorly  built  rental  quarters  for  working 
people.  The  rows  of  wooden  houses  without  any  modern 
improvements,  without  proper  sanitary  facilities,  and  often 
without  running  water,  are  usually  in  congested  areas  and 
in  the  least  desirable  locations.  Often  they  are  next  to 
mills  or  mines  where  the  tenants  work,  or  on  low  swampy 
land  subject  to  floods  and  no  good  for  anything  else.  They 
are  usually  far  removed  from  playgrounds  and  other  rec- 
reation areas.  The  southern  slum  has  often  been  built  to 
be  a  slum.  It  is  simply  a  convenient  barracks  for  a  supply 
of  cheap  labor. 

Lack  of  running  water  and  impure  water  supplies  are 
common  in  southern  slums.  Bathtubs,  sinks,  and  laundry 
tubs  are  among  the  bare  necessities  that  are  often  lacking 
in   slum   dwellings.      Sometimes   city  water   is   supplied 

(33) 


34 

through  a  yard  hydrant  shared  by  several  families.  Sur- 
face wells  are  often  contaminated  on  the  farms  and  in 
the  villages  and  small  towns.  Contaminated  milk  and  con- 
taminated water,  frequently  found,  cause  typhoid  fever, 
which  is  becoming  a  widespread  rural  disease  in  the  South. 

Lack  of  sanitary  flush  toilets  and  sewer  systems  for 
waste  disposal  is  characteristic  not  only  of  the  great  ma- 
jority of  farm  and  rural  homes,  but  of  a  large  proportion 
of  homes  in  small  towns  and  a  substantial  number  in  the 
cities.  Twenty-six  percent  of  southern  city  or  town  house- 
holds are  without  indoor  flush  toilets  as  contrasted  with 
13.1  percent  for  the  city  and  town  households  of  the  country 
as  a  whole.  In  extensive  rural  districts  there  are  not  only 
no  indoor  flush  toilets,  but  no  outdoor  privies  even  of  the 
most  primitive  sort.  Nearly  a  fifth  of  all  southern  farm 
homes  have  no  toilets  at  all.  It  is  in  these  regions  that 
hookworm  infection  and  consequent  anemia  have  flourished 
as  a  result  of  soil  pollution. 

There  is  also  extensive  overcrowding  in  the  southern 
town  areas.  In  one-eighth  of  the  dwellings  there  are  more 
than  one  and  one-half  persons  per  room.  In  the  United 
States  as  a  whole  only  one-fourteenth  of  town  houses  are 
so  crowded.  In  19  southern  cities  recently  studied  over 
40  percent  of  all  dwellings  rent  for  less  than  $15  a  month 
or  are  valued  at  less  than  $1,500,  as  opposed  to  24.6  per- 
cent for  the  64  cities  studied  in  the  country  as  a  whole. 
Only  three  of  the  southern  cities  had  a  smaller  percentage 
of  dilapidated  houses  than  the  national  average.  Five  of 
the  8  cities  with  over  a  quarter  of  their  houses  in  bad  con- 
dition were  in  the  South ;  1  of  these  had  4  out  of  10  of  its 
houses  either  in  need  of  repairs  or  unfit  for  habitation. 

A  study  of  blighted  areas  in  New  Orleans  showed  that 
their  tuberculosis  death  rate  was  twice  as  high  as  the  city's 


35 

average,  that  their  number  of  criminal  arrests  was  40  per- 
cent higher  than  the  average,  and  that  syphilis  and  cancer 
rates  were  high. 

Houses  in  the  rural  South  are  the  oldest,  have  the  lowest 
value,  and  have  the  greatest  need  of  repairs  of  any  farm 
houses  in  the  United  States. 

That  there  are  21/2  million  below-standard  houses  would 
be  a  conservative  estimate.  Of  3  million  farm  houses 
in  14  southern  States,  including  West  Virginia,  surveyed 
in  1930  only  5.7  percent  had  water  piped  to  the  house  and 
3.4  percent  had  water  piped  to  the  bathroom.  More  than 
half  the  farmhouses  are  unpainted.  More  than  a  third 
of  southern  farmhouses  do  not  have  screens  to  keep  out 
mosquitoes  and  flies. 

If  we  consider  below-standard  all  nonfarm  dwellings 
in  the  14  States  renting  for  less  than  $10  a  month,  and 
all  occupant-owned  nonfarm  dwellings  valued  at  less  than 
$1,500,  we  find  1%  million  below-standard  houses.  Recent 
studies  by  local  housing  authorities  in  many  of  the  south- 
ern cities  indicate  that  these  assumptions  are  correct.  In 
addition,  many  houses  now  renting  between  $10  and  $15 
are  definitely  below  standard.  The  average  farmhouse 
in  the  South  is  worth  about  $650.  The  average  farm 
renter's  house  is  worth  about  $350,  according  to  the  Fed- 
eral census  of  1930. 

Southern  cities  have  one  important  advantage  over 
northern  cities  in  their  approach  to  the  housing  problem. 
As  a  rule,  they  are  not  hampered  by  the  excessive  land 
valuations  that  have  developed  in  the  North  with  the  rapid 
growth  and  centralization  of  industry.  Although  the  1930 
census  shows  that  the  rate  of  movement  to  cities  and  towns 
is  greater  in  the  South  than  in  the  North,  the  effect  of 
this  is  not  yet  reflected  in  town  and  city  land  values  and 


36 

is  not  likely  to  be  wMle  wages  remain  low.  It  is,  how- 
ever, reflected  in  poorer  living  conditions,  overcrowding, 
and  greater  danger  of  the  spread  of  certain  diseases. 

By  the  most  conservative  estimates,  4,000,000  southern 
families  should  be  rehoused.  This  is  one-half  of  aU  fami- 
lies in  the  South. 


REPORT  TO  THE  PRESIDENT 

ON 

THE  ECONOMIC  CONDITIONS  OF 
THE  SOUTH 

Section  9 
LABOR 

The  rapidly  growing  population  of  the  South  is  faced 
with  the  problem  of  finding  work  that  will  provide  a  de- 
cent living.  Neither  on  the  farm  nor  in  the  factory  is 
there  the  certainty  of  a  continuing  livelihood,  and  thou- 
sands of  southerners  shift  each  year  from  farm  to  mill  or 
mine  and  back  again  to  farm. 

The  insecurity  of  work  in  southern  agriculture,  its 
changes  in  method,  and  its  changes  in  location,  make  the 
labor  problem  of  the  South  not  simply  an  industrial  labor 
problem.  Neither  the  farm  population  nor  the  industrial 
workers  can  be  treated  separately,  because  both  groups, 
as  a  whole,  receive  too  little  income  to  enable  their  mem- 
bers to  accumulate  the  property  that  tends  to  keep  people 
stable.  Industrial  labor  in  the  South  is  to  a  great  extent 
unskilled  and,  therefore,  subject  to  the  competition  of 
recurring  migrations  from  the  farm — ^people  who  have 
lost  in  the  gamble  of  one-crop  share  farming.  On  the  other 
hand,  the  industrial  workers,  with  low  wages  and  long 
hours,  are  constantly  tempted  to  return  to  the  farm  for 
another  try. 

As  industries  requiring  a  large  proportion  of  skilled 
workers  have  been  slow  in  developing,  the  unskilled  in- 
dustrial labor  in  the  South  is  particularly  hampered  by 
the  competition  of  unskilled  workers  from  the  farms  who 
accept  low  wages  in  preference  to  destitution  at  home. 
Much  of  the  South 's  increase  in  industrial  activity  has 

(37) 


38 

been  brought  about  by  the  removal  of  cotton  goods  manu- 
facturing plants  to  the  Southeast  from  higher  wage  areas 
in  New  England.  This  backbone  of  southern  industry 
ranks  nationally  as  one  of  the  low-wage  manufacturing 
industries.  In  the  South  it  pays  even  lower  wages  than 
elsewhere.  According  to  1937  figures,  the  pay  for  the  most 
skilled  work  in  this  industry  is  about  12  cents  an  hour  less 
in  the  South  than  the  pay  for  the  same  work  elsewhere. 
The  figures  for  the  cotton  goods  industry  also  show  the 
large  number  of  low-wage  workers  and  the  small  number 
receiving  high  wages  in  the  South.  More  than  half  of  the 
workers  in  southern  mills  earn  under  37.5  cents  an  hour, 
although  in  the  rest  of  the  country  the  industry  employs 
less  than  10  percent  at  such  low  rates.  In  the  South  less 
than  one-tenth  of  the  workers  are  paid  more  than  52.5 
cents  an  hour,  although  one-fourth  of  the  workers  in  the 
rest  of  the  Nation's  cotton  goods  industry  are  paid  above 
this  rate. 

Similar  differentials  between  the  South  and  other  re- 
gions are  found  in  lumber,  furniture,  iron  and  steel,  coal 
mining,  and  other  industries  generally.  The  influence  of 
the  farm  population's  competition  is  shown  in  the  un- 
skilled occupations  where  these  wage  differentials  are 
voidest.  The  average  differential  in  rates  for  new  labor 
between  the  South  and  the  rest  of  the  country  in  20  of  the 
country's  important  industries  in  1937  amounted  to  16 
cents  an  hour. 

In  spite  of  longer  working  hours,  the  total  annual  wages 
show  the  same  discrepancy.  The  average  yearly  pay  per 
person  in  industry  and  business  in  the  South  in  1935  was 
$865.41  as  compared  with  $1,219.31  for  the  rest  of  the 
country. 

Wage  differentials  are  reflected  in  lower  living  stand- 
ards. Differences  in  costs  of  living  between  the  southern 
cities  and  cities  in  the  Nation  as  a  whole  are  not  great 
enough  to  justify  the  differentials  in  wages  that  exist.  In 
1935  a  study  of  costs  of  living  showed  that  a  minimum 


39 

emergency  standard  required  a  family  income  of  $75.27  a 
month  as  an  average  for  all  the  cities  surveyed.  The  aver- 
age of  costs  in  southern  cities  showed  that  $71.94  a  month 
would  furnish  the  minimum  emergency  standard.  This 
would  indicate  a  difference  of  less  than  5  percent  in  living- 
costs.  Industrial  earnings  for  workers  are  often  30  to  50 
percent  below  national  averages. 

Low  wages  and  poverty  are  in  great  measure  self -per- 
petuating. Labor  organization  has  made  slow  and  difficult 
progress  among  the  low-paid  workers,  and  they  have  had 
little  collective  bargaining  power  or  organized  influence  on 
social  legislation.  Tax  resources  have  been  low  because  of 
low  incomes  in  the  commimities,  and  they  have  been  in- 
adequate to  provide  for  the  type  of  education  modern  in- 
dustry requires.  Malnutrition  has  had  its  influence  on  the 
efficiency  of  workers.  Low  living  standards  have  forced 
other  members  of  workers'  families  to  seek  employment  to 
make  ends  meet.  These  additions  to  the  labor  market  tend 
further  to  depress  wages. 

Low  wages  have  helped  industry  little  in  the  South.  Not 
only  have  they  curtailed  the  purchasing  power  on  which 
local  industry  is  dependent,  but  they  have  made  possible 
the  occasional  survival  of  inefficient  concerns.  The  stand- 
ard of  wages  fixed  by  such  plants  and  by  agriculture  has 
lowered  the  levels  of  unskilled  and  semiskilled  workers, 
even  in  modern  and  well-managed  establishments.  While 
southern  workers,  when  well  trained  and  working  under 
modern  conditions,  are  thoroughly  efficient  producers, 
there  is  not  enough  such  employment  to  bring  the  wage 
levels  into  line  with  the  skill  of  the  workers. 

Unemployment  in  the  South  has  not  resulted  simply 
from  the  depression.  Both  in  agriculture  and  industry, 
large  numbers  have  for  years  been  living  only  half-em- 
ployed or  a  quarter  employed  or  scarcely  employed  at  all. 
In  the  problem  of  unemployment  in  the  South,  the  relation 
between  agriculture  and  industry  becomes  notably  clear. 
Over  30  percent  of  the  persons  employed  on  emergency 


40 

works  programs  are  farmers  and  farm  laborers,  as  com- 
pared to  15.3  percent  for  the  country  as  a  whole.  The  inse- 
curity of  southern  farmers  is  reflected  in  these  figures. 
Seasonal  wages  in  agriculture  do  not  i)rovide  incomes  suf- 
ficient to  tide  workers  over  the  slack  seasons.  Part-time 
industrial  work  does  not  provide  security  the  year  round. 
As  long  as  the  agricultural  worker  cannot  gain  assurance 
of  a  continuing  existence  on  the  farm,  he  remains  a  threat 
to  the  job,  the  wages,  and  the  working  conditions  of  the 
industrial  worker. 


REPORT  TO  THE  PRESIDENT 

ON 

THE  ECONOMIC  CONDITIONS  OF 
THE  SOUTH 

Section  10 
WOMEN  AND  CHILDREN 

Child  labor  is  more  common  in  the  South  than  in  any 
other  section  of  the  Nation,  and  several  Southern  States 
are  among  those  which  have  the  largest  proportion  of  their 
women  in  gainful  work.  Moreover,  women  and  children 
work  under  fewer  legal  safeguards  than  women  and  chil- 
dren elsewhere  in  the  Nation. 

Low  industrial  wages  for  men  in  the  South  frequently 
force  upon  their  children  as  well  as  their  wives  a  large 
part  of  the  burden  of  family  support.  In  agriculture,  be- 
cause of  poor  land  and  equipment,  entire  families  must 
work  in  order  to  make  their  living. 

The  1930  census,  latest  source  of  comprehensive  infor- 
mation on  child  labor,  showed  that  about  three-fourths  of 
all  gainfully  employed  children  from  10  to  15  years  old 
worked  in  the  Southern  States,  although  these  States  con- 
tained less  than  one- third  of  the  country's  children  between 
those  ages. 

Child  labor,  itself  due  to  low  wages  for  adult  workers,  is 
also  a  source  of  cheap  competing  labor,  and  thus  it  tends 
to  make  wages  even  lower,  hours  even  longer,  and  generally 
to  break  down  labor  standards.  Child  labor,  therefore, 
affects  not  only  the  child  itself,  but  it  undermines  security 
of  adult  workers,  and  thus  reacts  seriously  on  the  whole 
community  and,  indeed,  the  whole  Nation. 

The  South  leads  the  Nation  in  the  employment  of  chil- 
dren in  both  farm  and  industrial  work.      One  hundred 

(41) 


42 

eight  out  of  every  1,000  children  between  10  and  15  years 
old  were  employed  in  the  South,  compared  to  47  out  of 
every  1,000  children  of  these  ages  in  the  country  as  a  whole. 
Only  Oklahoma  and  Virginia,  of  all  the  Southern  States, 
employ  fewer  child  workers  than  the  average  for  the  coun- 
try. Child  labor  legislation  in  these  13  States,  as  in  the 
United  States  in  general,  does  not  apply  to  agricultural 
work,  but  is  directed  primarily  to  industrial  and  commer- 
cial employment.  In  some  instances  the  coverage  of  the 
law  is  restricted  to  a  few  types  of  industrial  establish- 
ments, and  in  other  instances  the  laws  themselves  contain 
exemptions  which  greatly  weaken  their  effectiveness. 
Only  North  and  South  Carolina  have  established  a  basic 
minimum  age  of  16  years  for  employment.  Texas  has  a 
15-year  minimum  age  standard,  but  it  applies  only  to  fac- 
tory and  related  employment.  The  remaining  10  States 
have  a  minimum  age  of  14,  but  in  8  of  the  10  States  the 
laws  contain  exemptions  permitting  employment  below 
this  age. 

The  effectiveness  of  child  labor  legislation  depends  upon 
the  provisions  for  its  enforcement.  Employment  certifi- 
cation and  proper  inspection  are  necessary  to  make  such 
legislation  effective.  Three  of  the  five  States  in  the  coun- 
try which  have  not  made  legal  provision  for  employment 
certificates  are  Southern  States. 

Employment  of  children  affects  school  attendance.  The 
proportion  of  children  10  to  15  years  of  age  in  the  South- 
ern States  attending  school  in  1930  was  90  percent,  as 
compared  with  94  percent  for  the  United  States  as  a  whole. 
If  consideration  were  given  to  the  number  of  days  of  school 
attendance,  the  disparity  would  appear  much  greater ;  the 
school  term  generally  is  shorter  in  the  South  than  in  other 
sections. 

The  upper  age  for  compulsory  school  attendance 
throughout  the  rest  of  the  country  is  generally  16  to  18. 
However,  two  Southern  States  require  attendance  only  to 
14,  one  to  15,  and  only  in  two  States  does  the  upper  age 


43 

extend  above  16  years.    All  permit  exemptions  which  ma- 
terially lessen  their  effectiveness. 

In  many  parts  of  the  South  legislation  to  protect  women 
workers  and  to  establish  proper  working  standards  for 
them  has  not  been  well  developed.  This  has  had  far- 
reaching  effects  on  the  health,  the  living  conditions,  and  the 
general  well-being  of  women  and  their  families. 

In  a  region  where  workers  generally  are  exploited, 
women  are  subjected  to  an  even  more  intense  form  of 
exploitation.  Many  women  work  more  than  50  hours  a 
week  in  cotton  and  other  textile  mills,  and  in  the  shoe,  bag, 
paper  box,  drug,  and  similar  factories  in  certain  Southern 
States. 

The  South  has  two  of  the  four  states  in  the  entire  Nation 
that  have  enacted  no  laws  whatever  to  fix  maximum  hours 
for  women  workers.  Only  one  of  the  Southern  States  has 
established  an  8-hour  day  for  women  in  any  industry. 
Only  four  of  the  Southern  States  have  applied  a  week  as 
short  as  48  hours  for  women  in  any  industry. 

Reports  for  a  number  of  industries,  including  cotton 
manufacturing,  have  shown  wage  earners  receiving  wages 
well  below  those  estimated  by  the  Works  Progress  Admin- 
istration as  the  lowest  which  would  maintain  a  worker's 
family. 

Women's  wages  ordinarily  amount  to  less  than  men's. 
However,  only  two  of  the  Southern  States  have  enacted  a 
law  i3roviding  a  minimum  wage  for  women,  though  sev- 
eral others  are  attempting  to  pass  such  legislation.  Recent 
pay-roll  figures  show  women  textile  workers  in  an  impor- 
tant southern  textile  State  receiving  average  wages  10  per- 
cent below  the  average  outside  the  South.  Other  figures 
show  that  a  week's  wage  of  less  than  $10  was  received  by 
more  than  half  the  women  in  one  State's  cotton  mills,  and 
by  a  large  part  of  the  women  in  the  seamless  hosiery  plants 
of  three  States  and  in  the  men's  work-clothes  factories  of 
two  States. 


44 

Many  women,  even  though  employed  full  time,  must 
receive  public  aid  because  their  wages  are  insufficient  to 
care  for  themselves  and  their  children.  The  community 
thus  carries  part  of  the  burden  of  these  low  wages  and,  in 
effect,  subsidizes  the  employer. 

One  condition  tending  to  lower  women's  wages  is  the 
system  by  which  factories  ''farm  out"  work  to  be  done  in 
homes.  Women  have  been  found  at  extremely  low  pay 
doing  such  work  as  making  artificial  flowers,  sewing  but- 
tons on  cards,  clocking  hosiery,  embroidering  children's 
clothing,  stuffing  and  stitching  baseballs.  Although  this  is 
a  relatively  recent  tendency  in  the  South,  there  are  indi- 
cations that  such  work  is  increasing.  Usually  the  pay  is 
far  below  that  paid  in  the  factory.  A  study  of  industrial 
home  work  on  infants'  wear  disclosed  that  the  women 
worked  much  longer  hours  than  in  the  factory,  though  half 
of  them  received  less  than  $2.73  for  their  week's  work. 

A  low  wage  scale  means  low  living  standards,  insufficient 
food  for  many,  a  great  amount  of  illness,  and,  in  general, 
unhealthful  and  undesirable  conditions  of  life. 


REPORT  TO  THE  PRESIDENT 

ON 

THE  ECONOMIC  CONDITIONS  OF 
THE  SOUTH 

Section  11 
OWNERSHIP  AND  USE  OF  LAND 

The  farming  South  depends  on  cotton  and  tobacco  for 
two-thirds  of  its  cash  income.  More  than  half  of  its  farm- 
ers depend  on  cotton  alone.  They  are  one-crop  farmers, 
subjected  year  after  year  to  risks  which  would  appall  the 
average  businessman.  All  their  eggs  are  in  one  basket — 
a  basket  which  can  be  upset,  and  often  is,  by  the  weather, 
the  boll  weevil,  or  the  cotton  market. 

The  boll  weevil  can  be  conquered,  and  weather  hazards 
tend  to  cancel  themselves  out  as  good  seasons  follow  bad ; 
but  the  cotton  market  is  a  sheer  gamble.  On  this  gamble 
nearly  2,000,000  southern  families  stake  their  year's  work 
and  everything  they  own.  Their  only  chance  of  making 
a  living  is  tied  up  with  the  fluctuations  of  the  world  price 
of  cotton. 

No  other  similar  area  in  the  world  gambles  its  welfare 
and  the  destinies  of  so  many  people  on  a  single  crop  market 
year  after  year. 

The  gamble  is  not  a  good  one.  Few  other  crops  are 
subject  to  such  violent  and  unpredictable  price  variations 
as  cotton.  In  1927  cotton  farmers  got  20  cents  a  pound 
for  their  crop ;  in  1929  they  got  16  cents ;  in  1931  they  got  6 
cents ;  in  1933  they  got  10  cents.  Only  once  during  the  last 
decade  did  the  price  of  cotton  change  less  than  10  percent 
between  pickings.  Three  times  in  5  years  it  jumped  more 
than  40  percent — once  up  and  twice  down. 

(45) 


46 

Because  cotton  is  the  cornerstone  of  the  economy  of 
many  parts  of  the  South,  the  merchants,  manufacturers, 
businessmen,  and  bankers  share  the  hazards  of  the  farmer. 
The  men  who  finance  cotton  farming  charge  high  interest 
rates  because  their  money  is  subject  to  far  more  than  the 
normal  commercial  risk.  As  a  result,  the  mortgage  debt 
of  southern  farm  owners  has  been  growing  steadily  for  the 
last  20  years.  A  check-up  on  46  scattered  counties  in  the 
South  in  1934  showed  that  one-tenth  of  the  farm  land  was 
in  the  hands  of  corporations,  mostly  banks  and  insurance 
companies,  which  had  been  forced  to  foreclose  their  mort- 
gages. 

This  process  has  forced  more  than  half  of  the  South 's 
farmers  into  the  status  of  tenants,  tilling  land  they  do  not 
own.  Whites  and  Negroes  have  suffered  alike.  Of  the 
1,831,000  tenant  families  in  the  region,  about  66  percent 
are  white.  Approximately  half  of  the  sharecroppers  are 
white,  living  under  economic  conditions  almost  identical 
with  those  of  Negro  sharecroppers. 

The  pattern  of  southern  tenancy  was  set  at  the  end  of 
the  War  between  the  States,  which  left  thousands  of  for- 
mer slave  owners  with  plenty  of  land  but  no  capital  or 
labor  to  work  it.  Hundreds  of  thousands  of  former  slaves 
and  impoverished  whites  were  willing  to  work  but  had  no 
land.  The  result  was  the  crop-sharing  system,  under  which 
the  land  was  worked  by  men  who  paid  for  the  privilege 
with  a  share  of  their  harvest.  It  was  natural  under  this 
system  that  landowners  should  prefer  to  have  virtually 
all  the  land  put  in  cotton  or  other  cash  crops  from  which 
they  could  easily  get  their  money.  Consequently,  over 
wide  areas  of  the  South  cash-cropping,  one-crop  farming, 
and  tenant  farming  have  come  to  mean  practically  the 
same  thing.  Diversification  has  been  difficult,  because  the 
landlord  and  tenant  usually  have  not  been  able  to  find  a 
workable  method  of  financing,  producing,  and  sharing  the 
return  from  such  crops  as  garden  truck,  pigs,  and  dairy 
products. 


47 

Tenant  families  form  the  most  unstable  part  of  our  pop- 
ulation. More  than  a  third  of  them  move  every  year,  and 
only  a  small  percentage  stay  on  the  same  place  long  enough 
to  carry  out  a  5-year  crop  rotation.  Such  frequent  moves 
are  primarily  the  result  of  the  traditional  tenure  system, 
under  which  most  renters  hold  the  land  by  a  mere  spoken 
agreement,  with  no  assurance  that  they  will  be  on  the  same 
place  next  season.  Less  than  2  percent  have  written  leases 
which  give  them  security  of  tenure  for  more  than  one  year. 

Under  these  circumstances  the  tenant  has  no  incentive  to 
protect  the  soil,  plant  cover  crops,  or  keep  buildings  in 
repair.  On  the  contrary,  he  has  every  reason  to  mine  the 
soil  for  every  possible  penny  of  immediate  cash  return. 

The  moving  habit,  moreover,  is  costly.  Most  renters 
merely  swap  farms  every  few  years  without  gain  to  them- 
selves or  anybody  else.  The  bare  cost  of  moving  has  been 
estimated  at  about  $57  pei'  family,  or  more  than  $25,000,000 
annually  for  the  tenants  of  the  South.  Children  are  taken 
out  of  school  in  midyear,  and  usually  fall  behind  with  their 
studies.  It  is  almost  impossible  for  a  family  constantly 
on  the  move  to  take  an  active  part  in  community  affairs ; 
and,  as  a  consequence,  churches  and  other  institutions  suf- 
fer. For  example,  in  one  area  of  North  Carolina  where 
the  percentage  of  tenancy  is  low,  there  were  257  churches, 
with  21,000  members.  In  a  nearby  area  of  high  tenancy — 
with  three  and  one-half  times  as  many  people — there  were 
only  218  churches,  with  17,000  members. 

While  it  is  growing  more  cotton  and  tobacco  than  it  can 
use  or  seU  profitably,  the  South  is  failing  to  raise  the  things 
it  needs.  Southern  farmers  grow  at  home  less  than  one- 
fifth  of  the  things  they  use ;  four-fifths  of  all  they  eat  and 
wear  is  purchased. 

For  example,  the  region  has  more  than  half  of  the 
Nation's  farm  people,  yet  it  raises  less  than  one-third  of 
the  Nation's  pigs  and  cattle.  Although  it  has  more  than  a 
fourth  of  America's  total  population,  it  produces  only  one- 
fifth  of  the  country's  eggs,  milk,  and  butter,  one-seventh  of 


48 

the  hay,  one-eighth  of  the  potatoes,  and  one-twelfth  of  the 
oats.  Consequently  the  South  must  either  obtain  these 
things  from  other  regions  and  pay  handling  and  freight 
charges  or  do  without. 

Too  many  southern  families  have  simply  done  without, 
and  as  a  result  they  have  suffered  severely  from  malnutri- 
tion and  dietary  diseases.  Many  common  vegetables  are 
rarities  in  many  southern  farming  communities,  although 
both  soil  and  climate  are  extremely  favorable  to  their 
growth.  Production  of  foodstuffs  could  be  increased 
manyf old  in  the  South  without  infringing  on  the  markets 
of  any  other  region;  most  of  the  increased  outi)ut  could, 
and  should,  be  absorbed  by  the  very  farm  families  pro- 
ducing it. 

Because  they  have  concentrated  on  cash  crops,  southern 
farmers  have  planted  relatively  little  of  their  land  in 
alfalfa,  clover,  field  peas,  and  soybeans.  These  and  similar 
legumes  add  fertility  to  the  soil  and  at  the  same  time  pro- 
tect fields  against  washing  and  gullying.  If  widely  used, 
they  would  help  the  farmer  to  protect  his  investment  in 
his  land  and  take  a  little  of  the  gamble  out  of  his  business. 

On  the  other  hand,  cotton,  tobacco,  and  corn  use  up  the 
natural  richness  of  the  land  with  great  speed.  Fields 
planted  to  them  year  after  year  wear  out  and  wash  away 
much  more  quickly  than  fields  on  which  legumes  are 
planted  in  rotation  with  cash  crops.  Yet  6  acres  of  south- 
ern crop  land  out  of  every  10  are  planted  one  season  after 
another  in  cotton,  tobacco,  and  corn. 


REPORT  TO  THE  PRESIDENT 

ON 

THE  ECONOMIC  CONDITIONS  OF 
THE  SOUTH 

Section  12 
CREDIT 

There  has  never  been  enough  capital  and  credit  in  the 
South  to  meet  the  needs  of  its  farmers  and  its  industry. 
Its  people  have  been  living  so  close  to  poverty  that  the 
South  has  found  it  almost  impossible  to  scrape  together 
enough  capital  to  develop  its  natural  resources  for  the 
benefit  of  its  own  citizens. 

Lacking  capital  of  its  own  the  South  has  been  forced  to 
borrow  from  outside  financiers,  who  have  reaped  a  rich 
harvest  in  the  form  of  interest  and  dividends.  At  the 
same  time  it  has  had  to  hand  over  the  control  of  much  of 
its  business  and  industry  to  investors  from  wealthier 
sections. 

A  glance  at  the  bank  reports  shows  how  difficult  it  has 
been  for  the  southern  people,  whose  average  income  is  the 
lowest  in  the  Nation,  to  build  up  savings  of  their  own. 
Although  the  region  contains  28  percent  of  the  country's 
population,  in  July  1937,  its  banks  held  less  than  11  per- 
cent of  the  Nation's  bank  deposits,  or  only  $150  per  capita, 
as  compared  with  $471  per  capita  for  the  rest  of  the  United 
States.  Savings  deposits  were  less  than  6  percent  of  the 
national  total.  Of  the  66  banks  having  deposits  of  $100,- 
000,000  or  more  only  two  are  in  the  South,  and  they  barely 
qualify. 

Even  these  figures  do  not  fully  disclose  how  small  a 
share   the  South  plays   in  the   country's   financial   life. 

(49) 


50 

Southern  investment  banking  firms  managed  only  0.07  per- 
cent of  the  security  issues  larger  than  $1,000,000  which 
were  offered  for  sale  between  July  1,  1936,  and  June  1, 
1938 — and  it  is  the  investment  bankers  who  find  the  money 
for  virtually  all  important  industries. 

Insurance  company  funds  reflect  the  same  story.  South- 
ern companies  hold  only  $756,000,000,  or  about  2.6  percent, 
of  the  $28,418,000,000  of  assets  held  by  the  Nation's  life- 
insurance  companies. 

The  scarcity  of  local  credit  sources  results  in  high  in- 
terest rates  and  lays  a  heavy  burden  both  on  individuals 
and  local  governments.  The  average  interest  paid  on 
southern  State,  county,  and  municipal  bonds  is  4.4  per- 
cent, while  the  rest  of  the  country  pays  only  3.98.  The 
weighted  average  interest  rates  charged  by  banks  in  27 
large  southern  and  western  cities  in  June  1938  was  4.14 
percent,  while  for  New  York  City  it  was  only  2.36  percent, 
and  for  8  other  northern  and  eastern  cities  only  3.38 
percent. 

State  banks  outside  the  Federal  Reserve  System,  but  in- 
sured by  the  Federal  Deposit  Insurance  Corporation, 
charge  average  interest  rates  in  the  South  ranging  from 
6.5  percent  in  Virginia  to  10.43  percent  in  Texas  and  11.5 
percent  in  Oklahoma.  In  the  New  England  and  the  Middle 
Atlantic  States,  on  the  other  hand,  it  is  5.75  percent.  In 
the  Mountain  States  the  highest  average  is  8.5  percent, 
which  is  lower  than  in  5  of  the  Southern  States. 

Banking  laws  and  regulations  have  contributed  still 
further  to  the  scarcity  of  southern  credit.  Ordinarily, 
banks  can  make  credit  available  for  capital  purposes  only 
by  the  purchase  of  readily  marketable  securities.  This 
makes  it  almost  necessary  for  a  security  to  be  listed  on  an 
exchange  or  to  have  an  active  over-the-comiter  market. 
Locally  owned  southern  industries  are  usually  too  small 
to  meet  these  requirements.  Recently  these  requirements 
have  been  liberalized,  but  it  is  too  early  to  tell  whether  the 
change  will  be  helpful. 


51 

Faced  with  these  handicaps,  the  South  has  had  to  look 
beyond  its  boundaries  for  the  financing  of  virtually  all  of 
its  large  industries  and  many  of  its  small  ones.  This  has 
turned  policy-making  powers  over  to  outside  managements 
whose  other  interests  often  lead  them  to  exercise  their 
authority  against  the  South 's  best  advantage.  For  example, 
many  such  companies  buy  most  of  their  goods  outside  of 
the  South,  and  often  their  sales  policies  are  dictated  in  the 
interest  of  allied  corporations  in  other  sections  of  the 
country. 

If  the  high  cost  of  credit  has  hampered  southern  indus- 
try, its  effect  on  farming  might  be  illustrated  by  the  re- 
mark of  Louis  XIV:  ''Credit  supports  agriculture,  as  the 
rope  supports  the  hanged."  Almost  the  only  sources  of 
credit  for  small  farmers — aside  from  Federal  agencies — 
are  (1)  local  banks,  (2)  landlords,  and  (3)  merchants  and 
dealers. 

The  banks  cannot  meet  all  credit  demands,  because  what- 
ever scant  deposits  they  may  have  are  largest  in  the  fall 
and  winter,  after  harvest,  and  smallest  in  the  spring  and 
summer,  when  the  need  for  farm  financing  is  greatest. 

As  a  result,  the  majority  of  southern  tenant  farmers 
must  depend  for  credit  on  their  landlords  or  the  ''furnish 
merchant"  who  supplies  seed,  food,  and  fertilizer.  Their 
advances,  in  fact,  have  largely  replaced  currency  for  a  con- 
siderable part  of  the  rural  population.  For  security  the 
landlord  or  merchant  takes  a  Hen  on  the  entire  crop,  which 
is  to  be  turned  over  to  him  immediately  after  harvest  in  set- 
tlement of  the  debt.  Usually  he  keeps  the  books  and  fixes 
the  interest  rate.  Even  if  he  is  fair  and  does  not  charge 
excessive  interest,  the  tenants  often  find  themselves  in  debt 
at  the  end  of  the  year.  This  is  not  necessarily  a  reflection 
on  the  planter-merchant ;  very  often  he  would  like  to  im- 
prove the  lot  of  his  tenants  but  must  exploit  them  in  order 
that  he  himself  may  survive. 

The  credit  difficulties  of  the  landlord  are  only  a  little  less 
oppressive  than  those  of  his  tenants.     Because  he  ordi- 


62 

narily  stakes  everything  on  a  single  cash  crop — cotton  or 
tohacco — ^which  is  subject  to  wildly  fluctuating  markets, 
the  landowner  is  a  poor  credit  risk.  Consequently  he  often 
must  pay  interest  rates  as  high  as  20  percent,  making  the 
rates  for  tenants  range  considerably  higher. 

Attempts  to  find  a  remedy  through  credit  unions  have 
met  with  slight  success,  although  such  organizations  are 
spreading.  On  January  1,  1938,  there  were  564  Federal 
credit  unions  in  the  South,  with  80,530  members  and  assets 
totaling  $2,851,500.  The  unions  are  not  evenly  distributed 
throughout  the  region,  however,  since  Texas  alone  had  167 
while  Kentucky  had  only  4. 

Some  of  the  South 's  credit  difficulties  have  been  slightly 
relieved  in  recent  years  by  the  extension  of  credit  from 
Federal  agencies — to  the  business  man  by  the  Reconstruc- 
tion Finance  Corporation,  to  the  farmer  by  the  Farm  Se- 
curity and  Farm  Credit  Administrations,  to  municipalities 
by  the  Public  Works  Administration.  Many  other  agen- 
cies, ranging  from  the  Works  Progress  Administration  to 
the  Soil  Conservation  Service,  have  brought  desperately 
needed  funds  into  the  South 

The  fact  remains,  however,  that  the  South  has  not  yet 
been  able  to  build  up  an  adequate  supply  of  credit — the 
basis  of  the  present-day  economic  system. 


REPORT  TO  THE  PRESIDENT 

ON 

THE  ECONOMIC  CONDITIONS  OF 
THE  SOUTH 

Section  13 
USE  OF  NATURAL  RESOURCES 

The  great  natural  resources  of  the  South  have  been 
exploited  with  the  traditional  American  regard  for  cream 
and  disregard  for  skimmed  milk.  Perhaps  no  worse  than 
in  the  rest  of  the  country,  but  with  serious  effect  on  the 
South,  forests  have  been  girdled,  chopped,  and  burned 
without  regard  for  their  permanent  value  as  timber  or  as 
conservers  of  the  soil  and  rainfall. 

Ruthless  measures  have  been  used  to  obtain  the  best  ore, 
oil,  or  gas  with  the  least  effort.  Careless  room-and-pillar 
mining  has  resulted  in  the  abandomnent  of  untold  tons 
of  southern  coal  in  deserted  mines.  In  1935  the  Nation 
lost  through  wastage  479,826,000,000  cubic  feet  of  natural 
gas,  not  including  wastage  at  the  wellheads.  The  Pan- 
handle section  of  Texas  alone  accounted  for  67  percent  of 
this  extravagant  loss.  Other  sections  of  the  South,  simi- 
larly guilty,  failed  to  take  advantage  of  inventions  which 
would  have  saved  and  used  much  of  their  gas. 

Because  of  the  poverty  in  which  the  South  was  left 
after  the  War  between  the  States,  and  because  of  the  high 
cost  of  credit  since  that  time,  a  very  large  share  of  the 
natural  resources  of  the  South  is  owned  in  other  regions. 
To  the  extent  that  this  is  true,  the  South  is  exposed  to  a 
double  danger.  On  the  one  hand,  it  is  possible  for  a  mo- 
nopolistic corporation  in  another  region  of  the  country  to 
purchase  and  leave  unused  resources  in  the  South  which 

(53) 


54 

otherwise  might  be  developed  in  competition  with  the  mo- 
nopoly. On  the  other  hand,  the  large  absentee  ownership 
of  the  South 's  natural  resources  and  the  South 's  industry 
makes  it  possible  for  residents  elsewhere  to  influence 
greatly  the  manner  in  which  the  South  is  developed  and 
to  subordinate  that  development  to  other  interests  outside 
the  South. 

The  public  utilities  in  the  South  are  almost  completely 
controlled  by  outside  interests.  All  the  major  railroad 
systems  are  owned  and  controlled  elsewhere.  Most  of  the 
great  electric  holding  company  systems,  whose  operating 
companies  furnish  the  light,  heat,  and  power  for  southern 
homes  and  industries,  are  directed,  managed,  and  owned 
by  outside  interests.  Likewise,  the  transmission  and  dis- 
tribution of  natural  gas,  one  of  the  South 's  great  assets, 
is  almost  completely  in  the  hands  of  remote  financial  in- 
stitutions. The  richest  deposits  of  the  iron  ore,  coal,  and 
limestone  that  form  the  basis  for  the  steel  industry  in 
Birmingham  are  owned  or  controlled  outside  of  the  region. 
Until  recently,  too,  the  Birmingham  area  was  subordinated 
to  the  Pittsburgh  area  as  a  result  of  a  system  of  pricing 
steel  which  placed  it  at  a  tremendous  disadvantage.  As  a 
result  of  this  disadvantage — that  is,  because  it  was  more 
economical  for  them  to  be  in  the  areas  formerly  favored 
by  the  artificial  price  system — the  fabrication  plants  which 
use  most  of  the  steel  were  not  constructed  in  the  Birming- 
ham area.  The  fact  that  these  fabrication  plants  are  out- 
side of  the  South  will  make  it  hard  for  the  South  now  to 
find  a  ready  market  for  its  steel,  even  though  the  pricing 
system  has  been  changed. 

Most  of  the  rich  deposits  of  bauxite,  from  which  alumi- 
num is  made,  are  owned  or  controlled  outside  the  region. 
Practically  all  important  deposits  of  zinc  ore  in  the  South 
are  owned  elsewhere,  and  the  principal  zinc-mining  com- 
pany in  the  Southwest  is  a  subsidiary  of  a  company  com- 


55 

pletely  owned  and  controlled  outside  of  the  area  of  its 
operation.  The  South 's  resources  of  zinc  ore  and  the 
South 's  consumption  of  zinc  paints  and  metalware  are 
separated  by  a  long  northern  detour,  because  absentee 
ownership  and  discriminatory  freight  rates  make  it 
cheaper  to  ship  raw  materials  north  for  processing  than 
to  manufacture  them  at  home. 

Over  99  percent  of  the  sulphur  produced  in  the  United 
States  comes  from  Texas  and  Louisiana.  Two  extraction 
companies  control  practically  the  entire  output.  Both  are 
owned  and  controlled  outside  the  South.  One  has  15  direc- 
tors and  the  other  9,  but  only  1  member  of  each  board 
resides  in  the  South. 

For  mining  its  mineral  wealth  and  shipping  it  away  in 
a  raw  or  semifinished  form  the  South  frequently  receives 
nothing  but  the  low  wages  of  unskilled  and  semiskilled 
labor.  The  wages  for  manufacturing  this  natural  wealth 
into  finished  products  often  do  not  go  to  southerners,  but 
to  workers  in  other  areas ;  and  the  profits  likewise  usually 
go  to  financial  institutions  in  other  regions.  When  a  south- 
erner buys  the  finished  product,  on  the  other  hand,  the 
price  he  pays  includes  all  the  wasteful  cross-hauling 
involved  in  the  present  system. 

In  North  Carolina  and  Tennessee  is  produced  36  percent 
of  the  total  ground  feldspar  of  the  Nation;  but  one  can 
look  in  vain  in  the  South  for  any  important  tile,  glass, 
enamel,  insulator,  or  scouring  soap  industries  using  this 
product.  Georgia  produces  66  percent  of  the  kaolin  out- 
put of  the  country  and  South  Carolina  20  percent ;  but  their 
industries  use  little  of  this  clay.  Kentucky  is  a  ranking 
fluorspar  producer,  but  practically  its  entire  production  is 
shipped  out  of  the  South.  The  processing  of  cotton  into 
textiles  is  the  major  southern  industry;  but  many  of  the 
largest  mills  are  owned  outside  of  the  region.  Other  mills 
are  only  recent  emigrants  from  northern  locations  to  the 
South. 


56 

The  manufacture  of  cellulose  into  artificial  silk,  or  rayon, 
presents  a  striking  example  of  absentee  ownership.  The 
American  Bemberg  Corporation,  with  large  mills  in  Ten- 
nessee, uses  patents  and  processes  exclusively  owned  in 
Germany.  Of  the  company's  14  directors,  5  are  German, 
3  are  Dutch,  and  4  are  American  residents  in  New  York. 


REPORT  TO  THE  PRESIDENT 

ON 

THE  ECONOMIC  CONDITIONS  OF 
THE  SOUTH 

Section  14 
INDUSTRY 

Since  the  War  between  the  States  industry  has  become 
in  the  minds  of  most  Americans  a  symbol  of  profit  and 
wealth.  Certainly  the  wealthiest  parts  of  our  country  are 
the  most  industrialized.  There  has  long  been  a  strong 
''New  South"  movement  striving  to  achieve  for  the  South 
the  wealth  that  is  supposed  to  come  from  industry. 

With  respect  to  the  manufacture  of  cotton  textiles,  the 
South  has  come  from  a  subordinate  position  in  1860  to  a 
dominating  position  today.  It  is  natural  that  the  South 's 
most  outstanding  accomplishment  in  industry  should  be 
the  processing  of  its  greatest  agricultural  crop.  The  cotton 
manufacturing  industry  started  in  the  latter  part  of  the 
nineteenth  century  with  small  subscriptions  of  stock  pro- 
vided, for  the  most  part,  by  southerners ;  but  when  these 
mills  began  to  compete  successfully  with  the  New  England 
mills  northern  capital  was  introduced,  and  later  a  great 
many  northern  mills  were  shifted  to  the  South. 

Earnings  on  the  investment  in  the  southern  mills,  as  in- 
dicated by  figures  for  1933-34,  are  considerably  higher 
than  those  in  the  North,  but  the  wages  paid  as  reported 
from  1919  to  1933  are  considerably  less. 

During  the  year  1933  the  percentage  of  the  wages  to  the 
value  added  by  manufacture  was  60.8  percent  in  five  States 
in  New  England,  as  against  55.5  percent  in  five  Southern 
States. 

(57) 


58 

The  development  in  recent  years  of  the  manufacture  of 
cottonseed  products  has  proved  valuable  to  the  South.  In 
1929  the  value  of  these  products  reached  $265,247,000, 
about  half  of  which  was  for  cottonseed  oil.  The  further 
development  of  cottonseed  oil  for  oleomargarine  and  kin- 
dred products  has  been  hampered  by  taxes,  licenses,  and 
other  restrictive  legislation  not  only  by  States  outside  the 
region  but  also  by  the  Federal  Government. 

The  manufacture  of  cigarettes  has  become  important  in 
North  Carolina  and  Virginia.  The  iron  and  coal  indus- 
tries are  important  in  Alabama.  The  use  of  the  southern 
forests  for  many  purposes  has  constantly  grown.  In  Jan- 
uary 1938  the  South  had  38  pulp  mills  built  or  being  built, 
with  a  total  investment  estimated  at  some  $200,000,000. 
Many  new  uses  have  been  found  for  this  pulp,  such  as  the 
manufacture  of  building  boards,  rayon  staple  fiber,  wrap- 
ping paper,  and  quite  recently  newsprint  paper.  As  the 
United  States  is  the  largest  consumer  of  wood  pulp  in  the 
world,  the  development  of  this  industry  in  the  South  is 
significant. 

Meager  facilities  exist  in  the  South  for  research  that 
might  lead  to  the  development  of  new  industries  especially 
adapted  to  the  South 's  resources.  Some  new  industries 
have  been  developing  in  the  South,  but  others  have  dis- 
appeared. 

In  addition  to  absentee  ownership  and  the  high  cost  of 
credit,  the  major  problem  which  faces  almost  all  industry 
in  the  South  is  that  of  freight  rate  differentials.  The 
present  interterritorial  freight  rates  which  apply  on  move- 
ments into  other  areas  of  many  southern  manufactured  and 
semifinished  goods,  and  some  agTicultural  products  and 
raw  materials,  handicap  the  development  of  industry  in 
the  South.  This  disadvantage  works  a  hardship  particu- 
larly with  regard  to  shipments  into  the  important  north- 
eastern territory.  This  region,  containing  51  percent  of 
the  Nation's  population,  is  the  greatest  consuming  area. 
The  southeastern  manufacturer  sending  goods  across  the 


59 

boundary  into  this  region  is  at  a  relative  disadvantage  of 
approximately  39  percent  in  the  charges  which  he  has  to 
pay  as  compared  with  the  rates  for  similar  shipments  en- 
tirely within  the  eastern  rate  territory.  The  southwestern 
manufacturer,  with  a  75  percent  relative  disadvantage,  is 
even  worse  off.  Such  a  disadvantage  applies  to  the  south- 
em  shipper  even  when,  distance  considered,  he  is  entirely 
justified  on  economic  groimds  in  competing  with  producers 
within  the  eastern  territory. 

In  effect,  this  difference  in  freight  rates  creates  a  man- 
made  wall  to  replace  the  natural  barrier  long  since  over- 
come by  modern  railroad  engineering.  Both  actual  and 
potential  southern  manufacturers  are  hampered  because 
attractive  markets  are  restricted  by  the  existence  of  a 
barrier  that  is  now  completely  artificial.  The  southern 
producer,  attempting  to  build  up  a  large-scale  production 
on  the  decreasing  cost  principle,  finds  his  goods  barred 
from  the  wider  markets  in  the  Nation's  most  populous 
area.  In  marketing  his  products  over  the  wall  he  is  forced 
to  absorb  the  differences  in  freight  charges. 

Two  chief  reasons  for  higher  freight  rates  have  disap- 
peared. One  was  the  greater  expense  of  railroading  in 
the  South,  due  to  physical  difficulties.  This  has  been  mini- 
mized by  modern  engineering.  Another  was  the  compara- 
tive lack  of  traffic  that  prevented  the  spreading  of  the  cost. 
This  no  longer  is  the  case,  since  many  important  southern 
roads  have  as  great  a  traffic  density  as  those  above  the  Ohio 
River.  The  operating  costs  of  southern  lines  today  are 
lower  than  those  in  the  eastern  territory. 

The  artificial  rate  structure  handicaps  the  South  in  its 
efforts  to  expand  and  diversify  its  industry.  For  example, 
under  present  conditions  it  is  cheaper  to  concentrate  and 
ship  the  South 's  zinc  ore  to  the  North,  where  it  is  made  into 
metallic  zinc,  used  to  coat  northern  steel,  and  shipped  back 
to  the  South  for  its  *Hin"  roofs  and  other  galvanized  iron- 
ware, than  it  is  to  convert  this  zinc  ore  in  the  South  with- 
out the  economic  loss  of  cross  hauling. 


60 

An  equally  serious  deterrent  to  the  South 's  economic  de- 
velopment has  been  the  Nation's  traditional  high  tariff 
policy.  The  South  has  been  forced  for  generations  to  sell 
its  agricultural  products  in  an  unprotected  world  market, 
and  to  buy  its  manufactured  goods  at  prices  supported  by 
high  tariffs.  The  South,  in  fact,  has  been  caught  in  a  vise 
that  has  kept  it  from  moving  along  with  the  main  stream  of 
American  economic  life.  On  the  one  hand,  the  freight 
rates  have  hampered  its  industry;  on  the  other  hand,  our 
high  tariff  has  subsidized  industry  in  other  sections  of  the 
country  at  the  expense  of  the  South.  Penalized  for  being 
rural,  and  handicapped  in  its  efforts  to  industrialize,  the 
economic  life  of  the  South  has  been  squeezed  to  a  point 
where  the  purchasing  power  of  the  southern  people  does 
not  provide  an  adequate  market  for  its  own  industries  nor 
an  attractive  market  for  those  of  the  rest  of  the  country. 

Moreover,  by  curtailing  imports,  the  tariff  has  reduced 
the  ability  of  foreign  countries  to  buy  American  cotton  and 
other  agricultural  exports.  America's  trade  restrictions, 
without  sufficient  expansion  of  our  domestic  markets  for 
southern  products,  have  hurt  the  South  more  than  any 
other  region. 


REPORT  TO  THE  PRESIDENT 

ON 

THE  ECONOMIC  CONDITIONS  OF 
THE  SOUTH 

Section  15 
PURCHASING  POWER 

The  South  is  the  Nation's  greatest  untapped  market  and 
the  market  in  which  American  business  can  expand  most 
easily.  The  cost  of  '* selling"  the  South  modern  conven- 
iences is  already  being  borne,  to  large  extent,  since  the 
methods  that  now  sell  the  rest  of  the  Nation  reach  the 
South  with  little  or  no  extra  cost.  Radio,  movies,  periodi- 
cals, and  other  instruments  of  national  scope  for  acquaint- 
ing the  public  with  new  things  have  *'sold"  southerners  as 
they  have  sold  other  Americans.  There  are  no  language 
barriers,  no  geographical  obstacles,  no  tariff  walls,  no 
psychological  difficulties  to  be  overcome.  The  people  of 
the  South  need  to  buy,  they  want  to  buy,  and  they  would 
buy — ^if  they  had  the  money. 

The  South  has  an  abundance  of  the  things  the  Nation 
needs.  Its  vast  stores  of  raw  materials — forest,  mineral, 
and  agricultural;  its  extensive  power  resources — ^water 
coal,  oil,  and  natural  gas ;  its  ample  transportation  facili- 
ties— ^rail,  water,  and  air — and  its  varied  climate,  could 
make  the  South  a  tremendous  trader  with  the  rest  of  the 
Nation.  Its  growing  population,  with  vast  needs  and  de- 
sires, now  largely  unfilled,  could  keep  a  large  part  of  the 
rest  of  the  country  busy  supplying  them.  Such  a  relation- 
ship would  help  the  South  and  the  rest  of  the  Nation. 
Both  have  lost  because  this  relationship  does  not  exist. 

The  South 's  people  want  and  need  houses,  radios,  butter, 
beef,  vegetables,  milk,  eggs,  dresses,  shirts,  shoes.    They 

(61) 


62 

want  and  could  use  the  many  thousands  of  things,  little 
and  big,  that  men  and  machines  make  to  bring  health  and 
good  living  to  people.  The  average  southerner  with  a  total 
income  of  $315  could  spend,  without  help,  twice  that 
amount  for  the  things  he  needs  and  needs  badly. 

A  study  of  southern  farm-operating  white  families  not 
receiving  relief  or  other  assistance  showed  that  those  whose 
income  averaged  $390  spent  annually  only  $49  on  the  food 
they  bought,  $31  on  clothing,  $12  on  medical  care,  $1  on 
recreation,  $1  on  reading,  $2  on  education.  A  similar  stuv?y 
of  southern  white  village  residents  showed  that  those  whose 
incomes  were  under  $750  a  year  spent  75  cents  or  more  out 
of  every  dollar  for  food,  clothing,  housing,  heating,  light- 
ing, and  running  the  house.  Only  one  in  four  of  these 
families  owned  an  automobile  of  any  description. 

Southern  people  need  food.  The  all  too  common  diet 
in  the  rural  South  of  fatback,  corn  bread,  and  molasses, 
with  its  resulting  pellagra  and  other  dietary  diseases,  is 
not  dictated  by  taste  alone.  There  is  a  deficiency  in  the 
consumption  of  necessary  foods  even  among  employed, 
wage-earning  families  in  the  cities  of  the  South.  The  aver- 
age per  capita  butter  consiunption  in  cities  in  this  region 
was  found  to  be  about  half  of  that  in  eastern  cities  and  a 
quarter  of  that  in  cities  on  the  Pacific  coast.  Studies  of 
gainfully  employed  nonrelief  white  workers  in  ten  of  the 
largest  cities  of  the  South  show^ed  that  less  than  two-thirds 
spent  enough  money  to  buy  an  '*  adequate  diet  at  minimum 
cost,"  as  calculated  by  the  Bureau  of  Home  Economics. 
This  same  study  gives  further  evidence  of  underconsump- 
tion by  wage  earners  and  lower  salaried  clerical  workers. 
No  relief  families  were  studied. 

The  fact  that  the  families  who  could  spend  annually  $500 
or  over  per  person  consmned  well  over  half  again  as  much 
meat,  poultry,  fish,  and  eggs,  about  four  times  as  much 
cheese,  twice  as  many  tomatoes,  30  percent  more  bread,  and 
well  over  twice  as  much  fruit  of  all  kinds  as  the  families 
who  could  spend  $300  annually  per  person  reveals  the  pos- 


63 

sibility  of  a  vastly  increased  market  for  foodstuffs  of  all 
kinds.  The  extent  of  the  South 's  underconsumption  of 
these  basic  foodstuffs  can  be  estimated  from  the  fact  that 
half  of  the  people  of  the  South  have  an  income  of  less  than 
$300  a  year. 

Southern  people  need  clothes.  Farm  families  in  Missis- 
sippi and  Georgia  with  annual  incomes  below  $250  spent 
between  $19  and  $41  for  clothing  per  year.  In  villages  hus- 
band-and-wife  families  not  on  relief,  with  incomes  of  less 
than  $500  a  year,  spent  $14  for  the  husband's  and  $15  for 
the  wife's  clothing;  of  these  amounts,  they  spent  $3  for 
shoes  and  shoe  repairs,  $1  for  coats  and  other  wraps,  $1  for 
hats  and  caps.  Farm  families  having  similar  incomes 
spent  $15  for  the  husband's  wardrobe,  $12  for  the  wife's. 

One-half  of  the  southern  people,  and  an  even  larger  per- 
cent of  rural  southerners,  need  new  houses.  More  than  90 
percent  of  the  rural  families  need  water  piped  into  their 
houses;  even  more  need  water  in  their  bathrooms;  over 
one-half  of  their  houses  need  paint,  one-third  of  them  need 
screen  on  their  windows,  one-fifth  do  not  even  have  privies. 
More  than  a  fourth  of  the  urban  households  need  toilets, 
many  of  them  need  more  bedrooms,  over  one-fifth  of  the 
houses  are  in  need  of  repainting. 

Of  white  nonrelief  families  in  four  southern  cities 
with  incomes  less  than  $500,  over  one-third  had  no  indoor 
running  water,  almost  one-half  had  no  kitchen  sink  with 
drain,  none  had  gas  or  electricity  for  cooking,  none  had 
central  heating.  Among  southern  farm  families  of  the 
same  income  group,  less  than  1  percent  had  an  indoor  water 
supply,  less  than  3  percent  had  kitchen  sinks  with  drains, 
1  percent  had  indoor  toilets,  none  had  electric  or  gas  cook- 
ing facilities,  and  less  than  2  percent  electric  lights. 

They  need  these  improvements  and  they  need  household 
equipment.  In  33  villages  in  the  Southeast  recently  sur- 
veyed, a  smaller  percentage  of  families  owned  washing, 
ironing,  and  sewing  machines  and  vacuum  cleaners  than 
families  in  any  of  the  four  other  regions  studied.    Only  2 


64 

percent  of  the  white  families  and  0.3  percent  of  the  Kegro 
families  of  these  southern  villages  owned  washing  ma- 
chines, as  compared  with  81.2  percent  in  the  Pennsylvania, 
Ohio,  Michigan,  Wisconsin,  and  Illinois  villages  that  were 
surveyed,  and  77.3  percent  in  a  similar  group  of  California, 
Oregon,  and  Washington  villages.  While  about  the  same 
proportion  of  southern  white  villagers  had  refrigerators  as 
New  Englanders,  only  half  as  many  southern  Negro  vil- 
lagers were  as  fortunate.  There  was  an  even  greater  dis- 
parity in  these  household  equipment  items  between  south- 
ern farm  families  and  farmers  elsewhere  in  the  country. 
And  southern  farmers  need  equipment.  They  need  imple- 
ments, fencing,  and  fertilizer. 

Northern  producers  and  distributors  are  losing  profits 
and  northern  workers  are  losing  work  because  the  South 
cannot  afford  to  buy  their  goods. 

O 


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